What do you guys think about Real Estate as an investment?
My friend is thinking of buying a home to rent out.
She’s pretty hand to mouth from what she says (but I don’t know details)
and is thinking of cashing in her retirement fund to purchase a 25 yrs old home with three apartments in it. I beleive costs around $250K - she thinks its a great deal because the housing market is a buyers market.
What do y’all think?
I wouldnt use my 401k like that - just the penalties alone aren’t worth it.
Re: Real Estate as an Investment
There are factors to consider I'd say. Is this house in a location where she will easily find tenants?? Plus it's a 25 year old home.. these days new homes in newer communities cost almost the same so why would she want to invest in such an old home? Is she sure it needs no renovation? It'd be ideal if this place was close to a uni campus so she can individually rent out the rooms.. more moolah that way!
If I had that kinda money for investment, Id definitely not buy such an old house for one,.. except if it was highly upgraded or I was buying it for its prestige... say original woodwork/ brick work and such.. but I guess no. Id still not personally buy such an old house. Too many skeletons hidden in its closet imo.
Re: Real Estate as an Investment
Thank Bhenji - good points.
Lovely point about it being close to a university.
We're in NJ and the houses in the complexes run about 500k all the way to a million
but the one she's looking at is only 250K.
Re: Real Estate as an Investment
Oh alrite. How are the prices comparable to the neighboring houses? I know this realtor in our extended family who just did a lot of investment for the same reason like your friend in ottawa and later on suffered losses close to almost a million bucks!! Apparently they were priced cheaper, she invested and later it turned out that the owner of the property had gone bankrupt... and all those who had bought the houses had to suffer losses. They couldn't resell, nor do anything else with the land...
Tell her to be careful with her research. There's always major reno to take care of in old houses :)