Now that the market is flooded with “low” prices on real estate, people are looking for that great deal. Buy low, rent or sell high and make quick money. Seems easy, right? Read this excellent article, “Real Estate Horror Tales” by Caren Chesler in Financial Advisor Magazine to find out why real estate is not as easy as it sounds. It even provides advice from some expert real estate investors who suggest you trend carefully. According to the article, many of the decisions involved with real estate investing about non-financial ones. Have your researched or have intimate knowledge on the quality of the area where your property is located? Are you emotionally attached to the property? Even some of the financial decisions are underestimated. The article suggests that “people forget to take into account a lot of the hidden costs, like utilities, maintenance, property management and landscaping, which can cost thousands of dollars each year.” Not to mention the headaches involved with renters! One quote from a property manager in Dallas: “It’s all about how much does it sell for, and how much does it rent for?… But that’s almost like asking what is a stock’s price on the busiest day of the year.” In the end, the profit might not be worth the headache involved.
If you’re tackle some of the non-financial aspects of real estate investing and want some ideas on crunching the actual numbers involved, check out this article “All About Rents, Costs and Taxes” in Kiplinger’s Personal Finance magazine or if you’re thinking about turning your vacation home into income, read “Vacation Homes: Deal or No Deals?“