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Words of Caution

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Introduction

Introduction

It is not all rainbows and butterflies in the single family investment world. Herearesomeareastobeawareofpriortojumpingin:

Vanishing Equity - Remember that equity depends entirely on the market, and rises or falls based on conditions outside of the property. Althoughrealestategrowsovertime,itmayfallintheshorttermandyour equity position could be compromised. Keep this in mind as you determine when and where to invest. Equity is not real until you sell or refinance.Itisphantomprofit.

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The True Cost - Home ownership typically costs more than one might expect, and it goes doubly so for a rental. Whether it be a hot water heater leak, a roof replacement, lawn care, tenant damages, or evictions, one large event on a property could undermine an entire year's cash flow. Thinklong-term,notshorttofindthetruereturnonyourinvestment.

InvestorInvolvement - Unlike other types of investments, there is more involvement from the investor on single family homes. It is a sideeffect of having control (see above). That means that single family real estateinvestingisnot'set-itandforget-it'.Youwillneedtomakedecisions about maintenance, tenants, capital improvements, etc. That level of hands-on involvement dissuades some from the single family investment vehicle.

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