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Personal Finance -
Investing
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Written by Ahmed Amr / Omie Ismail
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Thursday, 14 January 2010 02:35 |
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Page 4 of 6
Geographic Mobility
Omie: A big problem with real estate investing is that it limits your mobility for decades. Buy two or three fourplexes and you'll be on your way to being a mini-real estate mogul. Unfortunately, you'll be stuck in the same geographic location for the next ten to twenty years. Have fantasies about moving to San Diego and catching the warm breezes in the winter? Not going to happen if you sunk all your money into rental properties in Rochester, Minnesota. It will take years to unload before you can turn a profit and if you catch a market downturn, you'll be spending a decade or two watching reruns of Baywatch to get your fill of the beach. Managing a rental remotely is a recipe for disaster unless you have someone managing it for you, and if you do, get ready for your returns to go down even further. So before you invest in rental properties, you better get ready to plant some serious roots.
Ahmed: Your assessment of mobility is exaggerated, apparently you have no family or friends. I've traveled all around the world while managing rental properties and if something went wrong, I always had someone that could cover for me. It doesn't take long to get a good maintenance guy that will respond to emergencies and if you invest in condos, not a lot of things go wrong. Eventually, you'll learn to screen your renters and make sure they don't have drums when they move in. If you're not greedy and keep your rents reasonable, you can attract long-term self-reliant tenants that will do the work and just send you the bill. When biting your nails watching your portfolio of stocks go up and down like a yo-yo or worrying about the next quarterly report, I'll be sitting in a cafe in Rome watching those monthly checks show up in my bank account like clockwork.
I do agree that if you're serious about making a small fortune in real estate, you should be very careful where you settle down and set roots. When it comes to real estate - your destination is your financial destiny. If the action is in San Diego, you should consider settling there instead of just visiting for a few days a year. If you settle down in Rochester, Minnesota, you've got bigger problems than your real estate portfolio. Always settle in a place you love.
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