Karl Eggerss was interviewed on CBS discussing whether or not investing in real estate is really a good deal. And, items to consider before you do.
Sharon Ko: It’s one of the best ways to build wealth, but before you jump in to make a real estate investment, here’s how to do it money smart.
Karl Eggerss: I’ve never had a client come in that says, “I don’t like real estate. Everybody seems to love real estate and it is a good investment. That’s kind of the punchline. Over time, I think people like it because it’s tangible, they can see it, there’s television shows about it about flipping and renting and all of that, and it is a good investment. In my opinion, it needs to be part of a portfolio and not the only thing. I think real estate, a lot of times people don’t think about the expenses that come along with that. So you buy a house, you’re going to fix it up. So you have all those expenses. You’re paying interest because you’ve borrowed money to do this investment. So you’re probably paying interest each month. You’ve got water bills, insurance, you have pest control perhaps. You have all these expenses and if you really run the numbers, sometimes people aren’t making as much on real estate as they think they are. And so I would encourage everybody, if you’re going to do it, really build a spreadsheet and really figure out, “What are my expenses going to be ongoing?”
If it’s something like an Airbnb you’re going to rent out or a Vrbo, how many realistic nights per week or per month are you going to rent that property out and figure all that out. And then again, you have to pay taxes on that income as well.
Sharon Ko: Now, what about real estate crowdfunding?
Karl Eggerss: Obviously crowdfunding is something pretty new in the last few years. There are again, pros and cons of some of that, which is sometimes liquidity, the safety aspect of it. I would prefer folks really… I mean, It’s about location, location, location. That’s absolutely true. So I would prefer the viewers save their own money, go do their own investment deal. Now there are funds you can participate in, whether it’s crowdfunding, there’s mutual funds, there’s private real estate investment trusts that allow you to kind of pull your money with others. The nice thing about that is it does enable you to kind of diversify. So instead of investing in one property, you’re investing in 20 or 30 properties. So it is a good way to get started. When you get to a bigger amount, then you may be able to do some on your own.