Aug 1, 2016
#36: It's the first Monday of the month, and you know what that
means ...
Time for another Ask Paula episode! On today's show, I answer a
handful of phone calls from listeners who posed questions
about real estate investing.
One caller from Atlanta said that he's thinking about buying a
rental property from a turnkey investing company. (These are
companies that buy, renovate and rent out properties, and then sell
those properties to investors.) On the surface, this sounds
appealing: all benefit and no work. But what are the drawbacks? Are
those risks worth it? Should this listener buy a turnkey property?
Or should he stay wary of red flags?
Another caller, who says he loves real estate
investing, mentioned that he's curious about the lack of
compound interest in the real estate game. If you're
investing in an index fund, he noted, your dividends and gains are
automatically reinvested. That's not the case with a rental
property. Sure, you can reinvest the cash flow from that property
into buying more properties (or buying other investments, like
index funds), but that's not the same thing. So ... what does
this mean? When you take compound interest into consideration,
are rental properties still a good deal? Or are real estate
investors missing out on this crucial wealth-building tool?
Another wanted to hear more details about a couple whom I mentioned
in Episode 4, The Ultimate Beginner Guide to Real Estate
Investing. This couple's strategy is to buy a home as a
primary residence, live there for at least one year, move
out, convert their former home into a rental property,
and repeat. They've done this over and over, and now they're raking
in the rental cash. The listener wanted more details
about that strategy ... which I offered in droves. (And yes, I led
myself into another little rant.)
Finally, one listener called to share his success story. In an
earlier episode, he asked whether he should repay his credit
card debt, or save for the downpayment on a house. I told him to
pay off his credit cards ... and he's now DEBT-FREE!!!!!! He tells
his success story on today's show.
Enjoy!
Paula