Investing in individual pieces of real estate has made headlines lately, but many blind investors have discovered that this is not the perfect investment opportunity. Individual pieces of real estate are currently believed to be undervalued, making it an ideal time to buy and hold real estate.
Maintenance Costs
Unfortunately, holding on to real estate comes with a great deal of risk that the typical investor is not usually prepared for. Maintenance costs with single family homes and multiunits have proved to be the undoing of many real estate investors. Many simply assume that maintenance costs will be similar to their primary residence.
In fact, a tenant can cost a landlord much more than predicted. Tenants tend to not keep up with general repairs, and often let minor issues progress without reporting them. In the case of an eviction, an investor has to contend with both a loss of rent money and the threat of vandalism. Expect appliances to wear out faster and cosmetic items such as carpets and paint, to need replacement more often.
Professional property management companies are usually experienced with mitigating these costs, but for an individual investor the cost of one of these management teams will often eat through any profits seen by the property.
What To Do Instead
Instead, investors who want to include real estate in their portfolio should look at REITs (Real Estate Investment Trusts) that are available through a self-directed 401(k) or IRA. These funds invest in a large variety of real estate, including single family homes, apartment buildings, and commercial buildings. This minimizes the risk of being overexposed in one market and reduces the risk of vandalism or other property damage. Furthermore, there are many tax advantages to these accounts, making them an ideal choice for many investors.
Dimension Capital Advisors customers utilize our proven strategies to profit from real estate investments in this soft and declining market. Call us today for a free consultation with one of our knowledgeable advisors.?800-385-4210
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Risk Real Estate Gamble
? Photodune | Photodune.net
Source: http://dcaunlimited401k.com/2012/08/the-real-estate-gamble/
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