Things to Consider Before Investing in Real Estate

Real estate is one of the most reliable wealth-building vehicles available, and it is also illiquid, management-intensive, and unforgiving of thin margins. Consider these before your first purchase.

Your time

Even with a property manager, ownership takes attention. Be honest about the hours you have available.

Your reserves

A furnace, a roof, or three months of vacancy should not put you in crisis. Hold reserves per property, separate from your personal emergency fund.

Your risk tolerance

Leverage magnifies returns in both directions. Decide in advance how much debt lets you sleep at night.

Your structure

How you hold title affects liability and taxes. Discuss entity structure and insurance with an attorney and a CPA before closing, when it is still cheap to get right.

Your exit

Every purchase should have a plan for holding, refinancing, or selling. Knowing the exit shapes how you buy.