Buying In your own Backyard” Part 1

When you become interested in buying real estate beyond that of a primary residence, you might be lured into investing into an out state rental property or a second home.

DON’T DO IT!!!

I had breakfast recently with a friend who told me he had invested in four houses/condos, all out of state within the past two months.   He had attended a seminar of a self proclaimed guru who prescribed some formula that was going to make him and his wife rich in real estate.

To make a long story short, One of the properties my friend bought was a townhouse in Florida.  So far so good, except as they tried to rent out the unit, the market tanked and the builder could not unload his inventory.  The builder today still owns over 50% of the 300 homes that were built and they are all vacant.

Imaging having 150 homes in your real estate portfolio and that they are all vacant, burning the biggest hole in your  line profit game.  My friend has a property manager who for the past five months cannot rent out his unit. Now he will have the competition of the builder, who is a desperate move will hold on to the units and rent them until the market regains strenth.  Sounds like a huge REO debacle in the making. I know I should have been a psychic.