Ginny

Twenty five percent of Ginny's trouble in her plex-buying adventures is that she doesn't have enough of a down payment. Specifically, most legitimate investor loans require at least twenty-five percent down. Additionally, to really make any money as an investor, it is best to buy real estate for cash. Barring one doesn't have a quarter of a million (or more in the AZ market) to put down on an income property, it is best to put down as much as possible. That way, the income property brings in cash flow as one sits on it waiting for the market to go up.

Another twenty five percent of Ginny's trouble is that she is not factoring for silly things like expenses. Mortgage payment aside, there are always expenses. Things break. The more necessary the widget the more expensive it is. For example air conditioners are necessary. There are other expenses such as taxes and insurance. Depending upon the kind of loan there could also be mortgage insurance, which could be in the avenue of $200 to $300 a month, depending upon the loan. And despite what the books are telling Ginny and her friends, sometimes the rent doesn't get paid or doesn't cover the costs of expenses.

The last fifty percent of Ginny's trouble is that she knows nothing about real estate investing. This will be the fifty percent that will go away the quickest once she gets going, because there is nothing like experience to teach someone. Of course, what she is relying on is the experience of others, in this case a few books and some investor shows on cable--and those cable shows are always real scenarios, right? Fortunately, she doesn't seem the type to pay for the seminars that come into town and promise riches. I give Ginny credit for brains on that one.

(Mental note, I must write a rant about those seminars sometime. Argh!)

What Ginny does have going for her is time. She is taking her time. She is paying attention to the market (so far). She is listening, at least partially. She is bright and I can tell wants to invest smartly no rashly (barring any loan fraud challenges, which I think we cleared up).

The reason I got into real estate to begin with was I had a fraudulent experience with a real estate agent who said she had been in the biz for 12 years. She had been selling homes for 12 weeks. I gained my last fifty percent (just like Ginny will) from the school of hard knocks. Frankly, we did well on that house. In the end, I sold it for sixty percent more than I paid for it to a gracious and lovely family. It wasn't my best transaction, or my worst. But it is one I liked the most. I hope I can offer Ginny the kind of help that will make her more savvy.