There is so much bad information floating around the new investor communities about this issue. Some of the problem is caused by gurus themselves, who don’t really understand the issue or are giving very bad advice about it.
Last night, I had a horrible time getting to sleep. I did exactly what I should not do before bed, which was look at my phone. I know – no devices after 9:00 pm, because it scrambles your sleep circuits. But I was excited because someone in one of my groups was asking a question about cap rates and I wanted to get back to them as soon as I could.
Most of us have been there – or they are there right now. You are dying to invest in real estate because you know it’s one of the best, least-risky ways to amass wealth.
But you also know that it “takes money to make money.” And you don’t have the money. So, what do you do?
Real estate cheerleaders want you to think that real estate investment is all unicorns and rainbows and crystal clear, sparkling rivers of easy cash flow.
But you follow The Mortar Blog to hear the truth.
If you are planning on buying multifamily property with 5 or more units, it’s considered a commercial property, not a residential one. You must get a commercial mortgage, not a residential one. If you’re planning to buy 5+ unit properties and you analyze them with a residential mortgage in mind, you’re in for a big, big surprise.
Just imagine. Today you’re sitting here with no investment properties to your name, but in a few short years, you could be making a living full-time as a real estate investor.
When someone tells you that a market is hot, and that you should get in on it, how does it make you feel? Do you want to run right out and look at deals there, and grab something in a rising market?
You can get paid to invest in real estate, even when you don’t have your own funds to put into the deal, let alone enough funds to close. But, let me first say that, in most cases, investors want you to have “skin in the game.” That is, they want you to have your own funds invested in the deal alongside theirs.
Do any of you have foreign investors in your deals? Or are you a foreign investor thinking about investing passively in a US real estate partnership? Do you know what happens when foreign investors invest passively in a US real estate deal? If the deal is not structured right, the result is not good at all. . .
I just saw someone touting the “Top Markets” for real estate investors, based on their apparently high “cap rates.”
Investors following advice to invest in these markets are probably taking on way more risk than they think. But why is that?