CLASSIC. It's a newbie real estate investor's biggest mistake: BUY HIGH, SELL LOW!
At the height of the market, people who dreamed of themselves as Donald Trump in the making rushed to buy real estate investment properties. After all, the real estate values are rising at a dizzying pace. Why, it's more than double digits appreciation in less than a year! Must get on the wagon, now!
It seemed like the right thing to do, especially since the stock market was reeling from dot.coms turning into dot.bombs. Real estate is brick-and-mortar investment. Must be a solid investment.
2008. Plop, plop. Fizz, fizz...Crash!
All of a sudden these golden treasures are plummeting in value. We read about so many of these "investors" wanting to cut their losses because they can't take it anymore.
That fabulous castle has turned into a fancy doghouse.
Repairs, replacement, and all maintenance issues. Cash out go. Followed by more cash outlays.
Vacancies are scary. Must keep units rented.
Wait...thought we'd have enough in reserve. What? We don't have a reserve account?
Too painful to continue? Yeah, yeah.
Thinking of selling as a short sale? Yeah...uhhh maybe...?
Or strategic default, i.e. walk away and let it foreclose. Ooooohhhhhh....
It's easy to say "Buy low, sell high." But do we?
A seasoned investor once told me, if you don't have the stomach for it, don't.
He said that some people rely on the news too much. And that by the time they get on board on what is the next big winner, they're already too late.
You won't always win...and you have to soldier on when you don't. Expect there will be highs and lows. And yes, sometimes your timing could be great, and the rest of the time, lousy.
Should these would-be real estate moguls suck it up? Or try again? After all, now is when one can truly buy LOW.
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