Pros and Cons of the "We Buy Houses" flipping companies

Pros of selling to a house flipping company

1. It’s easy.

Selling a home that needs work can be challenging if you want to get the best possible price. With a house flipping company, you avoid the difficulty of trying to sell for a good price. Instead, you sell to a company that will buy your house for the lowest price it can get away with. In exchange for taking a low price, you can quickly free yourself of the burden of owning the home. If you are in desperation mode this is often times your best bet. Selling to a real estate investor can get you out from under a problem very quickly.

2. You only have to make one decision.

Your only decision when selling to a house flipping company is to sell, or not to sell. You won’t have to decide what repairs to make or who you want to sell to. You will get an offer and make a single decision. After that, you are free of the home. Most often a house flipping company will be paying cash and there can be a quick closing if this is what you are after.

3. You don’t have to find a real estate agent.

Finding a good real estate agent can take a little bit of effort. You may have to interview several to find someone you are really comfortable with. You also don’t have to worry about disagreeing with your real estate agent once you hire one, which can happen. You are going solo.

4. You don’t have to waste your time going for sale by owner.

Trying to sell your home as a for sale by owner can be extremely challenging, to say the least. While the goal for most owners is to save on paying a real estate commission, it is a lot of work to accomplish this. For sale by owners need to keep in mind the following:

• You need to have some good marketing skills to make sure your home is found online. This is where the vast majority of buyers will be searching for a home.
• The photography on your home needs to be excellent.
• You must make yourself available for showings which may mean times of the day where it is not convenient for you.
• The buyer needs to be qualified for a mortgage so it will be your job to make sure this is the case. Make sure you understand the difference between pre-qualified vs pre-approved.
• There will be nobody there to represent you at vital stages of the home selling process such as the buyers home inspection.

When you sell to we buy houses company all of the headaches associated with selling as a for sale by owner are avoided.

5. You can probably sell no matter what shape your home is in.

A home can deteriorate considerably over a long time period, especially if regular maintenance is not conducted and repairs are not made as necessary to keep all components of the house in good working order. You may have a home that you want to sell that is virtually uninhabitable. But even in this state, there is probably a company that will still buy it. Not for very much money, but someone will still purchase it if just to obtain the lot that the house sits on.

Cons of selling to a house flipping company

1. You will probably make less on the sale than you would working with a Realtor.

When you hire a real estate agent, he or she is working to make you as much money as possible from your sale. The Realtor takes a percentage of the sale price as financial compensation, so he or she is motivated to fetch the best price. If a real estate agent believes that he or she can sell your home, there is a good chance that you can make more than you would if you sell to a house flipping company. In fact, I will go out on a limb as say you are GUARANTEED to get far more money when you list your home with a real estate agent. Selling to a real estate investor will almost always end up netting you less money!

Again you need to keep in mind that house flipping companies are buying your home for one reason – TO MAKE MONEY! They are not going to pay you anywhere close to the actual fair market value of your home.

2. You don’t have the option of improving the home to improve the selling price.

Even homes that are in relatively bad shape can often be improved to attract better quality buyers. In fact, that is probably what the house flipping company is planning on doing with your home. They will buy it, fix it up, sell it and make a nice profit. When you sell with a real estate agent, you get to make the improvements and reap the rewards. An outstanding real estate agent will be able to guide you on the best improvements for increasing home value. If you don’t have the money yourself it could be wise to borrow the money from someone else so that you end up putting the additional profit in YOUR pocket! There are things you can do to a home that does not cost a lot of money that many owners don’t realize. Here is a how to make your home more appealing when on a budget.

3. You give up control.

A house flipping company is focused on finding sellers who are desperate or just don’t care anymore. If you do care and you are not desperate – you just want to sell the house – there is no reason to work with a company that will rob you of all opportunities to get more from your sale. Working with your Realtor, you can determine exactly what you need to do to get a good price for the home, and often make a lot more money at the end of the day.

4. You wind up working with a company that does not have your best interests in mind.

House flipping companies are not all bad. They fill a niche and are capable of helping homeowners who have no other options. For those with no options, getting paid to get out from under the home is an opportunity worth taking. But if you think that maybe you could get more for the home, a house flipping company is not the partner you want.

A real estate agent is focused on your best interests. Your satisfaction is extremely important because reputation is everything for a Realtor. Your agent will give you insight into the different options available to you, and help you every step of the way as you go through the sales process.

As you can see there are many pros and cons of we buy houses flipping companies. What you really need to be concerned about are the scammers!

House Flipping Scammers

While many “We Buy Houses” flipping companies are completely legit, there are some that are not. Selling to a real estate investor is something that requires some due diligence on your part. It is imperative that you do careful research when dealing with a house flipping company. There are some common house flipping scams that all sellers should be aware of. The preceding link does an excellent job of summarizing many of the known scams out there. Just be careful and make sure none of these things mentioned are happening to you!

Tips For Managing Rental Properties #rentalproperty

Managing a rental property can create numerous legal issues. One of the most important aspects of supervising a rental unit is the prevention of problems before they occur. Knowledge of the basic duties a landlord owes to tenants is one of the first steps in warding off legal issues. The following landlord tips provide an overview of the common legal issues faced by landlords.

Landlord Tip #1: Don't Discriminate Against Prospective Tenants

A landlord may not reject a prospective tenant for reasons that are discriminatory. The Federal Fair Housing Acts prohibits a landlord from denying an applicant because of race or color, national origin, familial status, disability, or sex. A landlord may base a decision on the following factors: credit history, employment history, and income. If a landlord decides to reject an applicant because of information in a credit report, the Fair Credit Reporting Act requires the landlord to provide the applicant with the name and address of the credit reporting agency. A landlord should keep written documentation of the reason a prospective tenant was rejected and the screening process used should be applied consistently with each applicant.

Landlord Tip #2: Put a Landlord/Tenant Agreement in Writing

One of the most important landlord tips is to enter into a written rental agreement with the tenant. Typical residential lease agreements specify important rental terms that will guide the landlord/tenant relationship. The most important provisions include the following: the names of the tenants, the length of the tenancy, the amount of the security deposit, the party responsible for specific repairs, whether pets may live in the rental unit, and the amount of rent. A lease agreement should specify when rent is due, what form of payment is acceptable, whether a grace period applies, and whether late fees and returned check fees apply.

Landlord Tip #3: Regularly Inspect the Property

A landlord should inspect a rental property for dangerous conditions. When a tenant sustains injuries on the property, the landowner may bear legal responsibility. The law allows a person injured on a property to recover compensation when the landlord behaved recklessly or with intent, was unreasonably careless, violated health and safety regulations, failed to make certain repairs, or the premises was inhabitable.

A landlord should also be aware of criminal activity on and around the rental property. In many states, a landlord is responsible for providing the surrounding neighborhood with protection against illegal activity engaged in by tenants. At the same time, the landlord must protect tenants from each other and from criminals that enter the property. A landlord should make note of reports of criminal activity on the premises and should provide security features like deadbolts, security lighting, and locks on windows.

Landlord Tip #4: Notify Tenant before Entering the Rental Unit

Every state has different guidelines on when it is permissible for a landlord to enter a rental unit, but most laws are based on the tenant's right of privacy. Therefore, a landlord may only enter a rental unit for a few specific purposes. Most states will permit a landlord to enter a unit to make repairs, inspect the property, show the property to prospective tenants, or in the case of an emergency. In all instances, except during an emergency, a landlord must provide a verbal or written notice of the intent to enter the premises 24 hours before the entry. An emergency, such as a gas or water leak, overrides the requirement of notice.

Landlord Tip #5: Make Repairs Promptly

It is a landlord's duty to repair and maintain a rental property in a way that is fit for occupancy. The law refers to this as an "implied warranty of habitability." Most states require rental units to provide tenants with heating, plumbing, electricity, and gas. The failure to provide these basic features is a violation of the law. When a tenant makes a request for repairs to a necessary fixture in the unit and the landlord fails to make the repair, the tenant has a several options. Most states will allow a tenant to withhold rent, make the repair and deduct the cost from the rent, move out, inform state or local building inspectors, or pay the rent and sue the landlord for the difference of the rent and the real rental value of the property. If an injury occurs because of the failure to make a repair, the tenant may sue the landlord for compensation.

Should I Buy an Investment Property? #realestateinvesting

You may be interested in buying an investment property if you want to diversify your holdings beyond stocks and bonds. While stories of quick flips—buying a home, renovating it, and reselling at a much higher price—dominate TV reality shows,renting is the true core of real estate investing. That’s because historically there has been very little real price appreciation in houses. Renting generates a steady monthly paycheck, like a classic dividend-paying utility stock. Any price appreciation is a bonus.

But investing in a rental home isn’t like buying a low-cost index fund. Choosing the right property, maintaining it, dealing with tenants—all that takes work. Think hard about whether you’re prepared to put in the time. Can you handle after-hours calls? What if your tenant doesn’t pay rent? I still think of this "buy and hold" strategy as generational wealth, meaning wealth you can pass on to your children.  90% of all millionaires made their wealth in real estate.. 90 PERCENT!!!

Calculator: How much home can I afford?

Veteran real estate investor Leonard Baron says landlords ought to be handy and like fixing things. He also cautions people who are already juggling 60-hour jobs with kids to be wary. “Things may go well with your properties and you might not have too many issues, but that’s the exception, not the norm,” he says. Baron also suggests anyone considering getting into the rental business make sure they have enough savings to handle unexpected repairs early on, before the rent checks start coming in.

Even though home prices have bounced back, deals can be found—if you’re careful. Underestimating the costs of renovation and ongoing maintenance, the biggest rookie mistake, can quickly tank your returns.

Before you take the plunge, do your homework. Investor website BiggerPockets offers a helpful (and free) guide for first-timers here. Bigger Pockets is by far my most valuable tool! I can find investors, contractors, forms, and great advice for free!!!

Thanks for reading and please share with anyone interested in becoming their own boss :)

We Buy Houses Louisville, Kentucky       Eagle Thirteen Properties LLC

7 Reason's Why Right Now Is the Perfect Time to Invest in #RealEstate

I know, I know – you’ve been hearing for years that it’s a great time to buy real estate. When the bubble burst a few years ago, and people were losing money on their houses, it made investing in real estate, understandably, a scary proposition.

But thanks to the same recession that caused the real estate mess, there are loads of opportunities for those with the financial resources and means to buy real estate. 

1. Mortgage Interest Rates Are Still VERY Low 
Several years back when the mortgage rates hit an all-time low, people went crazy buying homes and investment properties. Some of the same people ended up getting greedy and borrowed against their newfound equity, which eventually contributed to the downturn of the real estate market. Don’t repeat these mistakes.

2. The High Volume of Recent Foreclosures
Many former homeowners have been displaced due to foreclosure, so there are a lot more renters in the market, making it optimal for investors to buy rental properties without the burden of the mortgage payment.

3. People Prefer Houses to Apartments
Right or wrong, there is often a stigma associated with finding an apartment for rent. If someone has owned a home, they might see it as a step backwards to move into an apartment. This creates a great opportunity for you as a real estate investor. Also, those who have owned homes prior generally will make better tenants because they tend to treat rental homes as they are used to treating their own home.

4. Tenants Often Prefer Private Landlords
I believe most people would prefer to rent from a good private landlord as opposed to a property management company. For some, it is the security of knowing that only your landlord has the key to your home. Others might feel that there is an opportunity to eventually purchase the home through a lease with option to buy, or lease-purchase contract.

If you have a short-term investment strategy and can buy the property at a low enough price, a lease purchase or lease with option arrangement with your tenant might make sense. It also increases the likelihood that the tenant will keep the place in good shape since they are going to buy it.

5. Real Estate Prices Are at a Low
In many markets, real estate is pretty cheap. Some of the best places to buy are Arizona, Florida, California, Michigan, and Nevada. Considering that housing is generally your biggest expense, you might want to consider relocating to an area where you can get a nice property for a reasonable price. When I moved to Arizona from Maryland, my housing payment was cut by 66%, although we did also downsize our home a little.

6. The Short Sale Market
The short sale market in many areas has also created some great opportunities for getting a non-foreclosure home at a great price. In my opinion, a short sale is a better option than buying a foreclosure, because you never know what the history of the house is or what has happened while it has been sitting vacant.

7. Real Estate is a Great Long-Term Investment
Regardless of the recent crisis, real estate is still a good, long-term investment. If you look back 30 years, real estate is still valued much higher than it was. And if you have tenants paying your mortgage, it makes the investment that much more profitable.

Final Word

If you do decide to invest, find your local real estate meetup so you can network and find local investors and realtors who can help you navigate the ever changing landscape of the real estate market. They often know when properties are about to go on the market and may have a lead on a short sale property that can be a great buy.

Happy house hunting! Will you be investing in real estate in the near future? Why or why not?

WE BUY HOUSES     Eagle Thirteen Properties

My top 5 tips for investing in #incomeproperty #RealEstate

2016 is definitely a sellers market! There aren't many great deals to find unless you know how to market yourself and analyze those deals correctly. Once you've done that, here are my top 5 tips on investing in income properties. 

1. Get Finances in Order

This one seems obvious, but it can be more complicated than you think. Investing in an income property isn't like purchasing a house; it can be much more risky. With an income property, you never know exactly how your tenants will treat the property and how much work will need to be completed throughout the year. For that reason, it's extremely important to have financial stability and a low-interest loan.

To begin with, ensure that you have enough money to handle the ups and downs of a rental property. The first rule of financial stability in the rental business is ensuring you can afford the payments on a house without the rental income. You may not always have renters, and when you don't, the bank still expects you to make payments on the house.

You will also need a healthy sum set aside for emergencies. When the pipes burst and cause thousands in property damage the insurance won't cover, you need to be prepared to take care of the cost.

Finally, remember that when you run a rental property business, you are not running a home; you're running a business. Therefore, it's wise to have an account separate from your business dealings for your spending related to the care of your income property.

2. Understand the Market

The real estate market is one of the most malleable markets in the country. It can change at the drop of the hat, and it's difficult to predict when it will go up again, unless you're thoroughly immersed in the market.

If you truly understand the real estate market, you know when it's smart to purchase a property and when it's best to wait for a better price. You can also gauge the proper times to raise rent prices. Overall, you'll receive better returns if you can predict the market.

3. Begin with the Right Property

Almost every prospect requires that you start out low and work your way up, and real estate investments are no different. It's important to begin with a solid property before finding a challenge.

A feature article published on Fox News gives several suggestions for the type of rental properties beginners should consider purchasing. Some of their tips include:

• "Buy a property that you love."
• "Skip the prize properties."
• "Buy as a personal residence and change to rental."
• "Buy properties in good shape."

Each of these options are excellent suggestions for those joining the business. Once you've mastered the simpler income properties, you can move on to another challenge, such as flipping a dilapidated property.

4. Plan for the Care of the Property

Managing a property isn't easy. If you choose to be the landlord, it's your responsibility to collect rent, keep the books, file taxes, screen tenants, handle maintenance, work out the insurance plans, write the contracts, and more. Many feel that they're up to the challenge and try to handle the work themselves.

For others, the task is daunting to say the least. If that sounds like you, you'll probably want to look into hiring a property management company. A property management company can cost anywhere from 5-10 percent of a month's rent, which decreases your return, but can be well worth the investment.

There are many benefits of hiring a property manager including local knowledge, low turnover, legal knowledge, marketing expertise, and expertly handled maintenance. It's not the right option for everyone, but many have found the time and money saving benefits to be worth the monthly fee.

5. Screen Tenants Properly

Finally, once you've take care of the basics, it's time to rent out the property. However, it's not wise to use a first come first serve basis with tenants. You need to be sure that they'll pay the rent every month and treat your property respectfully. This requires a certain screening process, which will allow you to find great tenants.

Furthermore, be prepared for the tenant to screen you, in a sense. The best tenants will be prepared with the right questions. An article previously published on Inc.com outlines some of the most popular questions tenants ask before signing a lease. Make sure you have the answers ready, and take these questions as a sign of their dedication to the property.

Getting a handle on the income property business will likely be more challenging than you think, but once you've mastered these basics, you'll be ready for the next important business step: making a profit.

We Buy Houses Eagle Thirteen Properties

Top cities for #RealEstate #Investors

Top Cities For Real Estate Investors

Eagle Thirteen Properties

Millennials are finally moving into their homebuying years, but with precious few starter houses available for sale, a growing number of these buyers are choosing to rent single-family homes. That is a big opportunity for investors overall, especially in markets seeing the greatest rent growth — and some of those markets are surprising.

Large-scale, institutional investors may have cleaned house during the foreclosure crisis, buying distressed homes in markets like Las Vegas, Phoenix and much of Florida, but the bulk of investors today are smaller scale. They are seeing more lucrative opportunities in less-obvious markets. Knoxville, Tennessee, for example, saw a nearly 20 percent jump in single-family rent rates in the first quarter of this year, compared to a year ago, according to RentRange, a provider of market data and analytics for the single-family rental industry. Its average gross yield for investors was just more than 8 percent. Syracuse, New York, also ranks in RentRange's top 10 list of the most lucrative rental markets, with rent gains of more than 17 percent annually and an average gross yield of nearly 11.27 percent. Milwaukee, New Orleans and Charleston, South Carolina, round out the top 10 list.

"The single-family rental market across the U.S. continues to offer significant opportunity for investors," said Wally Charnoff, CEO of RentRange. "The robust data available today empowers even noninstitutional investors to analyze geographies and select the investment locations throughout the U.S. that are most opportune, as opposed to being limited to their own backyard." 

The just-released data actually show a shake-up at the top of the list, with Syracuse and Milwaukee entering the top 10 for the first time. Florida continues to have more markets on the list than any other state, even increasing in the first quarter compared to the end of 2015, due to single-family rent rises in the state.

The share of institutional investors, defined as those who purchase at least 10 properties in one calendar year, continues to shrink, now just 2.6 percent, compared to 3.4 percent a year ago, according to RealtyTrac. That has opened the door for smaller-scale investors to compete.

Real estate agents are reporting growing spring demand, but warn that it is being met with, "persistently tight inventory, making competitive multiple-offer situations commonplace in many markets," according to a monthly report for April released Monday by Credit Suisse analyst Michael Dahl. Of the 40 markets he surveyed, 36 saw higher prices.

Tight supply and higher prices will push ever more potential buyers into rentals. Saving for a down payment is one of the biggest barriers to entry for first-time buyers, and finding a well-priced starter home ranks right up there as well. Until the housing market regains a healthier balance between buyers and seller, rentals will clearly be a lucrative investment.

We Buy Houses In the greater Louisville, Kentucky area

5 tips that will help landlords find great tenants

The key rule in real estate is obviously “location, location, location.” We  have all heard that before. If becoming a landlord is in your future, you’ll want to follow the key rule to owning an investment property: “tenant, tenant, tenant.” Whether or not you follow that key rule rule will really make or break your landlord experience. I’ve already had feedback during this landlord series from a few readers that have had really unfortunate experiences with bum tenants. Some didn’t pay their rent and others trashed the residence. There are times that you’ll do all the right things and still end up with a bad tenant. Thus is life. But here are the important things to remember for the best possible outcome in finding a good tenant for your investment property:

Follow the Fair Housing Rules. Read up to make sure you aren’t making tenant decisions based on race, gender, sex, religion, disability, or family status.

Meet them in person. This should go without saying. You will want to physically meet them and walk them through the property. Seeing your prospective renter in person can give you some important indicators as to whether or not they will respectfully inhabit your home. You’ll get a sense of their cleanliness by seeing what they drive and the gut feeling you get about them is priceless. It takes very little time to conduct a walk through so make sure you don’t miss this.

Check their references. This includes calling their last two landlords, their employer, and their personal references. Don’t slack on this. You’ll want to have actual conversations with all of these people. This helps you develop a better picture of what your tenant is like. Ask their former landlords how clean this applicant was and if they paid their rent on time. Did they have loud parties? Did they part amicably? Those are the things you want to know.

Perform a background check. My favorite service is Transunion’s Smart Move. It is the easiest service for both the landlord (you) and the tenant. With this service you won’t have that annoying paperwork problem – and you won’t be handling your prospective tenant’s social security number. You create an account and send them the link. They pay a fee and fill out the proper information. Then Transunion tells you whether or not they are likely to be a good tenant. Simple as that.

Take a large deposit. You’ll want to take a substantial deposit that will actually cover damages in case your tenant turns out to be a rotten apple. One key tip is to never make the deposit the same as their monthly rent obligation. For instance, if the rent is $1,000 you should ask for $1,200 as a deposit. If you ask for the same deposit as the rent amount your tenant will likely assume that it covers their last month’s rent. You don’t want that.

If you heed ALL of this advice you are much more likely to get a good tenant which makes your job as a landlord MUCH easier. Don’t do this halfway. The price you’ll pay over the lease term because of a poor tenant choice is just too high.

Thanks for reading! Greg Hammond Eagle Thirteen Properties/ We Buy Houses

How to Juggle Your Real Estate Investing with a Full-Time Job

by Greg hammond

If your life is anything like mine , you probably know how challenging it can be to build your real estate business while holding down a full-time job.

If you have a family, friends, hobbies and a life –then you probably know it gets even more complicated…

Take ME for example. I’ve got several things on my plate every day:

• I have a full-time job (maintenance director for a local hospital) that usually consumes anywhere from 40 – 60 hours every week.

• I have a wife and three kids – all require (and fully deserve) some pretty substantial slices of my time each day.

• Every week, I put significant time and effort into publishing content for this blog (and reading through others blogs)
• I'm the co-chair for our local Relay For Life team

• I’m an active member of my church, neighborhood and a couple of local real estate groups where I try to participate in several extracurricular activities each year.

• I have a handful of other hobbies and fun activities including coaching my two sons basketball teams that I thoroughly enjoy  (and without these things, I’d probably lose my sanity).

Some days, it is totally feasible for me to keep all of these things working together in perfect harmony. Other times, it can be a major challenge to keep it all straight. When one or more of these segments of my life picks up and gets busy – life can get overwhelming very quickly.

Most successful real estate investors are quite familiar with this juggling act…   but how are YOU supposed to take care of all your pre-existing obligations AND carve out the time you need to run a profitable real estate investing business?

First off – I should clarify that my schedule doesn’t necessarily look exactly like this every week, month & year.

Depending on what projects are hot on the burner, some weeks may require that I devote substantially more time to “Rental Properties” (if I’m trying to buy a new property), or to my “Land Business” (if I’ve got a big transaction in the works), or to my “Full-Time Job” (when I get slammed with a massive load of projects to work on)…     but all in all, if I average out all of my various working activities over the course of an entire year, this is probably the most accurate representation of how my time is spent.

And to be clear, this is my “working life” we’re talking about here – so it excludes things like being a parent, husband, and other adult duties like cleaning the house, yard work, shopping, fixing stuff, etc.

My weekends (and some week nights after 7 pm) are still my most productive times of the week in terms of making progress with my various business endeavors. This time is essential to my ability to “get ahead” so to speak.

The End Goal

As of today, if I had to show you how I envisioned my life panning out over the next 20 – 30 years, this is probably the best representation of how I’d like to see my global income when all is said and done: It’s important to note that I have no aspirations of “full-time investing” – ever. Why? Because that would literally be nothing more than replacing one job with another.

In the future, I’d like the majority of my income to come from my rental property portfolio. Why? Because this stream of income will keep coming in the door without requiring any substantial work from me. It also has the benefit of some significant tax shelters that aren’t available from a job, a land business, a blog, or any other source of income (that includes flipping, wholesaling, rehabbing, and almost any other real estate business you can think of). These other streams of income (full-time job, land business, blog, misc projects, etc) can & certainly will provide some substantial income, but it’s only for the purpose of feeding the long-term growth of my rental property portfolio. They shouldn’t be the actual end game (according to my plan, anyway).

Of course, it’s impossible to know precisely how the future will pan out. There are an endless number of variables that could come into play and completely change the trajectory of where my life is headed. However – I do believe it’s important to at least have an idea of what direction I’d like life to go…   

How Is Your Time Spent?

Now that you know how I spend my time, how I make my money and what my end goal is – let’s talk about YOU.

 Where do you spend the bulk of your time? Which of your activities generate the majority of your income? Are you satisfied with your current situation or do you need to make some changes? If changes are needed – what’s your game plan?   What are you doing with your daily life? Are you moving towards the destination you want to reach?

Of course, you won’t be able to answer these questions until you truly know what you’re trying to accomplish – so take a few minutes (or hours, if necessary) to organize your goals, figure out where you want to go and what kinds of activities will bring you towards that destination.

If you’re lucky, you might just figure out some things that need to change… and the sooner you can do that, the better.

6 #realestate #investments you should avoid like the plague!

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As any experienced real estate investor will tell you, not all investment properties are created equal. Homes that might be perfect for a primary residence, for example, might not yield positive cash flows — and without positive cash flows, you’re losing money, not making it.

Here are a few things to think about and properties to avoid when you are ready to invest your hard-earned cash equity capital.

1. Anything that doesn’t generate rental income

These include second homes and land investments. Too many people invest in properties hoping that they will go up in value. But there is an opportunity cost to having money sit in real estate that doesn’t pay any income. Even if the property goes up in value, you’ve got to reconcile and account for all the money you would have earned if your money had instead been in the bank or in stocks and/or bonds.

2. Anything with negative cash flows

If you buy a “prize property” — such as a fancy downtown fancy condo, beach property or vacation rental — it’s probably going to be 20+ years before you get your first dime of positive cash flow. And that’s just no way to invest your hard-earned money. Pencil out any potential deal ahead of time, and buy properties that pay cash flow from day one — the moderately priced properties in non-prize areas.

3. Tenant-in-common (TIC) investments

These were popular from 2005 to 2007 as a way to diversify a portfolio without having to deal with the hassle of owning and managing real estate. But few people ever earned a dime because of all the costs and fees associated with the agreements.

4. Development deals

Development of land is extremely high risk. There are entitlement, construction and market pricing risks, plus countless others. These investments are best left to the extremely wealthy and experienced investors who can take the chance that they’ll never see their money again.

5. Condo-hotels, intervals & time-shares

These aren’t even investments. There’s no ability to predict cash flows, rental income or future value/sales prices. And they are very hard to resell and typically only at a fraction of the original cost.

6. Foreign real estate

You might be OK buying real estate in Canada or Britain – however don’t forget about the foreign currency risk — but foreign countries generally have different real estate laws, protections and fluctuating currencies, making these properties extremely high risk.

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Greg Hammond, We Buy Houses in Louisville/ Eagle Thirteen Properties