REAL ESTATE INVESTORS

This week I came across an article from the Vancouver Sun talking about investing in Real Estate and comparing it to other investments like stock markets. What got my attention was how precisely Fabio Campanella described the difference between a novice and an experienced investor.Keep reading for the article below...

Novice investors tend to follow market momentum and stretch themselves thin. They see prices increasing year over year then go out and take massive amounts of leverage to get in on the action "before it's too late."

What often happens is they buy more than they can handle, they don't do proper due diligence on their tenants, and they get caught with a dud investment that they can't support with their personal cash flow. This frequently leads to panic selling in order to raise funds to pay off large amounts of debt
consequently resulting in losses.

Smart investors take their time. They seek out properties in desirable neighborhoods, scrutinize their tenant's ability to make rent payments before they take them on, manage the property with a keen eye, but, most importantly, they do not over-extend their leverage. Smart investors realize there may be times when tenants can't make rent or that markets may temporarily turn south.

Even if the original intention for a real estate investment is a short-term flip, the smart invest-or will not purchase a property they aren't able to hold over a long period of time should price momentum not go their way in the short run.

Direct investment in real estate is not like buying a passive investment such as a mutual fund. It requires a time commitment, experience, and patience but the long-term results can be superb when done properly.

Fabio Campanella, CA, CFP, CIM, is a partner at Campanella McDonald LLP. Fabio@CampanellaMcDonald.com © Copyright (c) The Vancouver Sun

Well Said Fabio!

Tibor Bogdan
 
Read more:
http://www.vancouversun.com/business/Rental+property+still+good+investors/6670401/story.html#ixzz1vp1DXpCT