Comments on: Oh, Those Scary Unknowns in Real Estate Investing

By: Mike Farmer

Mike Farmer — Fri, 27 Jun 2008 22:24:48 +0000

Thanks for the comments, Colin and Jason

By: Jason

Jason — Fri, 27 Jun 2008 18:05:29 +0000

Investing in real estate is a dual edged sword right now. The economy is a bit shaky, but real estate prices are at an all-time low for the past 7 years. At least in the US, where there have been foreclosures galore.

I recently saw a feature about this on Larry King with Trump and a bunch of other panelists, all were pretty much saying that if you had cash or good credit…now is the time to buy.

Personally I’d rather invest passively in an REIT or Mortgage Investment Corporation. Less risky in my opinion.

By: colin

colin — Fri, 27 Jun 2008 17:50:12 +0000

Solid advice. Any investor knows that he risks losses but anticipates that he’ll have more wins overall.

By: Mike Farmer

Mike Farmer — Thu, 26 Jun 2008 20:44:52 +0000

Good advice, Marco.

By: Marco

Marco — Thu, 26 Jun 2008 17:44:07 +0000

So true, real estate can b e risky, the art and professional way to approach investing is to conduct as much due diligence as possible.

This should not only include the state of the market you are investing in and predictions for the future but also the industry in general, as well as the history of the property and if it’s a buy to let the tenants. Also if it is off plan property as a lot of investment property is nowadays you must look at the experience and history of the builder and property developer. I.e. have they completed successful real estate projects in the past on time and within budget?

In short, do as much research as possible and consult professional help from advisers other investors and of course legal advice. Never sign a contract to purchase with out knowing all the facts first.

By: Mike Farmer

Mike Farmer — Wed, 25 Jun 2008 17:25:44 +0000

Thanks redfish Mark — That’s funny about the cds being a risk — people just don’t know how to look at things sometimes.

By: Redfish Mark

Redfish Mark — Wed, 25 Jun 2008 16:20:19 +0000

Mike, insight and well written post as always. Risk is part of the real estate game, just as risk is part of everyday life. You’re right, risk can’t be eliminated but you can mitigate it to some degree by gathering all the facts you can about your markets of interest and your projects, but your advice on have multiple exit strategies is very, very good. (We define a minimum of four solid exit strategies for each of our projects.)

I recently had a physician who wanted to invest with us ask for a guarantee that our investment offered no risk. We chatted about his request for a bit, I initially thought he was joking. He wasn’t, and as it turns out he’s holding a pile of cash in CD’s while inflation / low interest rates eat away at his returns – some would argue a risky position in itself. Go figure.