Make your money going in?

[Timothy Johnson]

I am curious as to wether you guys agree with the idea that an RE investor should only take on investments in which he/she will make their money going in. IE buying RE considerably under market value. Of course this is probably required if your interest is flipping but what about those who want to buy, hold, and rent? Because technically one could purchase a REI at market value and still make money through renting ect. Is "making your money going in" a requirement for those of us who want to rent out with a long term goal in mind?

Thanks!

[Jon Holdman]

First, you always want some equity in the property. If you have enem a small price decline and have to sell, 10% equity can disappear, leaving you to pay to dump a loser.

Second, read about the 50% rule in the Rental Property forum. A property whererent is only half the piti payment is a major loser.

The idea is to make money, not lose it. Buying properties that don't cash flow (50% rule) at retail prices are complete losers unless you have a lot of appreciation. Why bother?

But if that's what you want to do you'll find plenty of people to take your money.