Saturday, July 16, 2005

If you really aspire to be a landlord, read this.

Ok, I was rambling generally about housing bubble which I firmly believe is in the late stage. This doesn't mean that one can't make money on real estate, the odds are just getting slimmer especially if you don't do your homework. Just like bear markets, in its bear declining phase, only 25% of the stocks has the potential of going up. So will the real estate market when it goes down. With this disclaimer out of the way, if you decide today that you want to be a landlord, by all means, but please at least read Do your homework first. This is at least how the REAL pros are doing it, by the numbers.

Just in case you wanted to see how a real world example could screw up your balance sheet and cash flow, read this: Landlords have high hopes in Silicon Valley

P.S. More housing troubles in Denver (free registration required). What this article didn't point out is that what would happen to their nice profits if you factored in a 5-10% DECLINE in prices which happens even in price Boom (it's called a correction).
The profits that most people have may turn out to be losses due to how little equity there is in those speculative properties. Imagine having to pay your bank in order to get rid of your house, suddenly you realize you don't really OWN the house. Remember LEVERAGE works both ways, it'll make you rich and it'll make you poor, too.

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