Nobody wants to make real estate decision. We want to be educated, informed and feel like we've made a wise decision when it comes to real estate investing. There are however several terrible real estate investments that you want to stay as far away from as possible.
Adapted from a real estate article from RealtyTimes.com, here are five terrible real estate investments to steer clear of.
This is probably not a shock to anyone. We know the timeshares do have their place, however, many people get involved, coerced, and pressured into buying these types of investments. There's a large amount of money you need upfront plus maintenance fees and if you resell the property the value can drop up to 80%. Plus, these investments are very difficult to share and get out of once you've committed to it. It's best to steer clear of them unless you're totally up for the responsibility that it means.
#2. Negative cash flow.
Nobody wants to bleed money but if you purchase an extravagant or luxurious condominium or home as an investment, you may not see any cash flow for two decades. If you want to make the most of your money it's better to find a moderately priced property that can generate income from the beginning.
#3. Zero rental income properties.
This could be in the form of a parcel of land or a second home in the hopes of increasing value over time. However, even if the property does go up, you may have invested more money than you could have earned if you had invested in a stock or another property that generated income from the beginning.
TIC, or tenant in common investment, can be a very risky investment because you don't actually on the piece of property but instead combine your assets with other people and other investors. There is an advantage of being able to diversify your investments but, this should not be your only type of investment and you need to know that involved with this type of investment before jumping in.
#5. New developments.
Many investors look into development plans but may never see their money again. Unless you are highly experienced and have a lot of money to throw away, you may want to skip these altogether. This is a long-term investment with no positive cash flow and you may or may not see your money later on. Understand all the risks and benefits you not only in the short run but in the long run as well.
There are however many great investments, especially around the Portland real estate market. Finding a small single-family home in a great neighborhood that needs a little bit of cosmetic work is the ideal investment for monthly cash flow investors and those looking for long-term investments. If you'd like a list of ideal investment properties around the Portland Metro area, contact my office today.