Individuals often get persuaded into ‘investing’ in real estate. But not every property makes for a good investment. Some can be particularly ruinous. Study your cash flow… and ask the question. Questions, actually. Does my cash flow lend itself to this investment? Are my pockets deep enough to carry the investment in a down market? Are the current housing trends supporting of this choice of investment?
If the answer is a resounding “Yes”… go for it. Your investment should not just pay for itself, it should also leave you with a little over and above the outgoings on it. Properties that do not carry themselves financially are not necessarily wrong, but they get to be termed as high risk. Though there is a silver lining to that cloud since any losses incurred on an investment property might earn you a tax break! When your equity in the property continues to grow, in spite of periods of vacancy, consider it as an investment. Or else it was pure “speculation”!
