This is One of the Most Common Reason Real Estate Investors Give Up
Posted on July 19, 2007
Filed Under Real Estate Investing |
The pitfalls: Mr. Ellis faced two major problems as a landlord. The first, he says, was not screening tenants thoroughly — he was forced to evict two tenants. In retrospect, he says he should have worked harder to find better tenants instead of rushing to fill vacancies with renters who ultimately got behind on rent or were evicted for other reasons. Also, the delayed return of military personnel from Iraq to local military bases has kept the local housing market soft and lowered demand for rentals. His monthly profit has been small because he financed the property’s purchase with a 100% loan and faced higher monthly mortgage payments as a result, he says. An investor who could put 20% down and secure a more favorable mortgage may fare better than he did, he says, adding, “It has potential for cash flow.”
You can read the article here.
I’ve written about this type of situation before, this is not the market for 100% leverage when paying full price. Investors who position their long term hold properties correctly will do just fine, those who are over extended in their positions, like Matt, are going to find themselves in ever increasing trouble. Sure, some can ride it out because of other assets but sadly many investors bought the guru lines and don’t have any other assets to tap.
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