Have you ever felt the rush of excitement when a friend mentions she recently purchased an investment property? You immediately start dreaming of passive income pouring in on a monthly basis (aka, someone else paying your mortgage) and soon you’re calling your friend’s real estate agent.
Investing in real estate is one of those topics of conversation that can make a person seem like a sophisticated investor but whether or not it’s a prudent part of one’s portfolio, depends entirely on your specific financial profile. Much like the stock market, it’s easy to fall for the rush of “getting in while it’s hot” but there is no way to perfectly time your investment and you should be ready to commit as a long-term investor. There’s no doubt that real estate can be a beneficial part of a diversified portfolio but it’s its own animal and there are many risks to consider alongside the potential opportunities. [Read more…]