Real Estate Investing’s 7 Deadly Sins

Real estate investing in Kansas City, California, Florida or wherever share these deadly sins;

  1. Not understanding the income.
  2. Not understanding the expenses.
  3. Not understanding property management.
  4. Not understanding Mr. Murphy.
  5. Not understanding your financing.
  6. Not understanding your reserves.
  7. Thinking you understand.

4 Comments

Filed under Real Estate Investing

4 responses to “Real Estate Investing’s 7 Deadly Sins

  1. Pat

    Chris:

    You have hit the head of the nail.

    The price (and your time) you pay for an investment is more than just projected rents paying for mortage, taxes, and insurance.

    The seller may hide their maintenance expenses or just did not do maintenance. Fail to disclose past expenses they used in their federal tax filings. Fail to disclose that half the tenants are not paying rent or tenants leave every year.

    If you paid more for the property than the tax assessment, your taxes are going to be based on what you paid for the property in the near future.

    Chris posts about the four benifits of real estate investing (areas you would let your mother live). Cash Flow Before Taxes, Principal Reduction, Tax Benefits/Depreciation, Appreciation. To make these work you have to manage the property and keep it rented.

    If you cannot afford to pay the mortage and pay for repairs if your tenants don’t pay the rent (takes time to evect), don’t buy the property.

    My deadly sin is typing too much for this post.

  2. That’s okay, Pat. Love the comment.

  3. Possibly your best post this year.

  4. Are you suggesting I should write less? šŸ™‚ Thank you.

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