Blog > Real Estate > Diversify Your Real Estate or Crash with the Market
 | Email This Article Email This Article  | 

Diversify Your Real Estate or Crash with the Market

Posted June 30, 2008

“Many real estate investors never get beyond their backyards. They add to their investment portfolios over time, yes… but by buying more of what they are familiar with.” — Lief Simon

by Lief Simon

Baltimore – (TFN): I met an investor recently who had created a big, profitable portfolio of rental houses in the Boston area. He was highly leveraged, but he had positive cash flow. Mortgage payments were made. Repairs were covered. And there was a nice bit left over at the end of each month. Life was good… until the local economy skidded. In a matter of a few months, as jobs were lost and people moved out of the area, this guy found himself with negative cash flow. Long story short, he eventually lost most of his houses to the bank.

Many real estate investors never get beyond their backyards. They add to their investment portfolios over time, yes… but by buying more of what they are familiar with. This approach can seem prudent, but it carries a big risk. If the market that you know… that you’ve made money with in the past… that you’re comfortable with, turns… well, you’ll wish, maybe too late, that you’d diversified at some point along the way.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Panama has long been the prime choice for retirees, second-home buyers, and property investors alike. Many have retired there in style, enjoyed terrific vacation homes, and made money. The country deserved the #1 spot on International Living’s Global Retirement Index for six straight years. It’s been a winner.

But the editors at International Living decided to dig deeper…

They’ve tapped into the local market and found investment and lifestyle properties that are so affordable many people thought they were gone…

- Apartments in Panama City for less than $70,000.

- Prime building lots on the edge of town starting at $25,000.

- Good rental apartments starting at $350 per month

- Beachfront lots on the shimmering Pacific at $125,000 for almost an acre… with small beachfront parcels starting at an amazing $38,000!

- A rolling green 10-acre farm in the hills of Chiriquí for just $30,000.

It’s the hidden, affordable Panama. A place where you can still live on $1200 a month.

Today, there is more happening in Panama than could possibly be shared with you in just an article. That’s why they are inviting you to join them in Panama this summer…

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

The leverage was a critical factor in this situation, of course, but the fundamental problem was that this investor had all his eggs in one basket. He wasn’t able to ride out the downturn in the Boston rentals market because every one of his investments was in that market. Had he owned even a few rentals somewhere else, maybe he could have juggled cash flows and held on to his assets.

Another investor I met during the pre-construction boom in the U.S. bragged that he controlled more than $10 million worth of apartments under construction. He controlled them with small deposits… mostly 5% down… and planned to flip them before they were completed, as most pre-construction investors do. He hadn’t been at this long, and he didn’t understand the risks. The key risk with pre-construction, is not being able to sell on your contract before the balance of the purchase price is due for closing. Read on to learn more.

****Make sure you sign up for our free TFN News Feed for breaking news, special reports and new financial videos. You can pick your favorite reader . Or if you prefer, you can have or free daily email delivered to your inbox .

Related Articles


Posted by Lief Simon · Filed Under Real Estate 

Comments

close Reblog this comment
Powered by Disqus · Learn more
blog comments powered by Disqus