Are Investment Homes Worth the Risk?
I should link to BripBlap more often because they nearly always provide pause when you’re considering decisions that could impact the future of your financial health. A day or two ago, they said,
In real estate, the quicker you can go into massive debt, the quicker you can become massively wealthy. (Link)
It’s true, but in a very misleading way. The operative word here is “can.” It is easy to miss, and many people will automatically interpret this as “will” or even worse, “probably will.” That is precisely incorrect.
If you go massively into debt, what you do is you take on a massive amount of risk. Risk isn’t necessarily a bad thing; we take risks many times every day – getting on the highway, crossing the street, eating that Big Mac (well, a bunch of Big Macs, over time).
I have taken risks before, but have never ventured into buying real estate for investment purposes. I’d like to, but the specter of draining my retirement account to buy a house is daunting. Then again, my retirement account has been steadily receding anyway - as has real estate. Maybe this would be a good time to cut my losses in my 401(k) and invest in real estate while prices are low.
However, it’s not a decision to be made lightly, as our friends at BripBlap say. It’s a crap shoot. Is it worth it?
