What is your biggest fear about investing in real estate?
The last poll: Do you Prefer Capitalism or Socialism; was extremely lopsided.
Last I checked, capitalism was winning with 1121 votes over 94 for socialism.
This week, the competition should be closer.
The question is “What is your biggest fear about investing in real estate?”
In other words: What is holding you back from taking action?
For those of you who are already investing in real estate, what was your biggest fear before you started?
These are my concerns:
1.- Closing cost are about 7% (calculated based on the ARV) to sell the property.
2.- Low Liquidity so higher spread on the bid and ask, thighten lending procedures, economy, job rate, foreclosures still around, etc, etc, so more time holding the property.
3.- 1031 requires a timeframe, along with the timing of the lease, in the case the investor wants to rollover to another property.
Typical deal:
65K Buy
10k Rehab
===
75k All included.
-3k Closing cost for the refinance at the ARV
100k ARV
22k (Unrealized Gains w/o final’s closing costs)
-7k Closing for the final sell (realtors fee’s etc)
15k (Unrealized Gains with final closing costs)
and because points 2) and 3) its like to be a sell with a discount lets say 5k less to have everything on time.
10k Realistics gains (under current circunstances and for an average investor, using a realtor for both transactions buy and sell)
10k its good money and it may take 3+ years to have it realistically in our pocket.
Monthly income will offset Tenants and Expenses’s risks.
Thanks
Will