Kris Krohn here with REITV
Today, we're talking about the cons of investing in
real estate.
Are there downsides?
Real estate done wrong can become your
next and new nightmare. And, you know what?
that keeps a lot of people out of the
game but it is so easy to do things
right when you have the right kind of
knowledge. Here's a couple things you
want to watch out for. The first one is
insufficient funds for a down payment.
You know if the markets go up and down
sometimes the bank's say "you must put
thirty percent down" and at other
crazy times they say "you must put
nothing down" Me, when I buy an investment
property I am always putting twenty
percent down even if they'll let me go
15, 10, or 5.
Why?
because if I bought
the property with a twenty percent or
fifteen percent margin and I have
another twenty percent down payment on
top of that that property's almost half
paid off. What does that do to my cash
flow? What does that do to my equity position?
Bumps them up and produces a
lot of safety. So you gotta watch out for
making sure you're not getting into
programs where the goal isn't put down
as little as possible. Another thing that
really gets in people's way is timing.
Right? we draw these graphs some of our
other videos about the market going up
and the market going down and the smart
people get in at the trough at the
bottom and the consumers often get in at
the top. I'm always entering the market
at all times because I know what I'm
doing. One of the things that you want to
watch out for is if the market is
getting hotter and hotter and hotter and
prices are going up and up and up that's
when most people in that buyers market
are going to actually pay top dollar.
Top dollar at the top of the market equals
you super unhappy so don't get you super
unhappy by paying top dollar at the top
of the market.
So I personally experience
that real estate can be a huge blessing
but real estate can also be a super big
disappointment and it really comes down
to whether you bought the property right
out the gate you never buy something
hoping that in time that will make up
for itself and become something great. No, no, no.
You want to know that walking into
the deal. So, we talked about the
disappointments in the cons of real
estate well here's the first one,
Buy a home without equity. Super disappointing.
Why?
Because if something happens in your
life and you need to unload a property
if you don't have enough margin to
unload think of selling costs you have
to pay often 6% realtor fees, 3% to the
buyer's agent, and 3% to the
sellers agent, one and a half percent
closing costs,
seven and a half percent on a
one-hundred-thousand-dollar properties,
seven grand on a two hundred thousand on
properties is fifteen thousand dollars.
So if you don't have equity, you're going
to lose when you sell that property. And,
even though none of us ever wants to be
in a position where we are forced to
sell, having no equity doesn't really
even give you the option,
The second one
is a like a cash flow. Right? you buy
a property that's cash flowing $32 a
month now all that needs to happen is
a condominium go up but you know maybe a
block over and all of a sudden the
prices on house rents drop a little bit
and now you're negative. So secure your
equity, secure your cash flow, and that's
what will keep you from making some of
the biggest mistakes in real estate.
of course there are cons of investing in real estate
but you know what? there are
pros too and you are in the driver's
seat of making sure you know the
difference so that you can successfully
and smartly maneuver yourself into the
success that is easily available in real estate.
Do yourself a favor, get the right
team if you have fears about real estate
consider leveraging my team. There is no
charge for using my team up front and
they'll never keep even a penny of the
profits to help you invest in real
estate the best real estate around the
country. Experts finding the deals with
the best margins. Expert managing a cash
flow, and experts letting you know the
best times to sell so that you can
maximize your advantage every step of
the way. That's how I do it I'm just
passing it on you.
See you next week.