Real Estate Investment
Investments to Avoid

Real Estate Investments to Avoid

May 28, 2007 - Purchasing a primary residence can be one of the best investments both financially and personally that one could make however not all real estate investments pan out quite as well.  Consider the following investments in real estate which are popular, even trendy, but the end result might not turn out quite as expected. 

Vacation or Second Homes

Given the run up in real estate prices over the past decade, vacation or second homes have never been more popular.  If you purchase a second home in a resort area chances are you can rent or lease it out when you are not using it yourself to help cover the costs of ownership. Unfortunately few second or vacation homeowners go to the trouble of renting or leasing their treasured properties and as a result they do not receive sufficient income to offset the sizeable expenses involved in ownership.  Therefore the property can easily become a financial siphon rather than a positive (or for that matter even a neutral) cash flow generator.  A vacation or second home should be considered almost exclusively a luxury expense and is not normally a good investment for most people. 


A timeshare is an arrangement whereby parties agree to share ownership of or the right to use a property over a specified time period.  A time share allows you to buy one or more weeks of use (or occupancy) of a specific unit or a unit within the network of a resort or hotel chain.  Unfortunately the decision to purchase a timeshare becomes an impulse buy for most people while they are in the middle of enjoying a luxury resort vacation experience and are then offered the opportunity to re-live that same vacation on an on-going basis.  Purchasing a timeshare through re-sale is likely the most cost effective way of doing so if you are convinced that you must have one.  Many current owners of timeshares who have already paid the high up front commissions and fees and have now tired of spending their vacation in the same location every year are more than eager to unload their timeshare interests.  

Real Estate Limited Partnerships (RELP)

In a RELP a group of investors pool their financial resources to purchase property.  The resulting transaction creates both limited and general partners.  The general partners manage the investment property for all the investors and distribute the pro-rated share of profits to each investor.  Because ongoing management fees and commissions tend to be high and RELPS are not publicly traded the returns have only been mediocre at best.  Also investors in limited partnerships may be required to make future contributions as required by their formation agreements known as master limited partnerships.  Unfortunately RELPS tend to end up working out best for the managing partners and few others.  In a limited partnership you will likely have a high opportunity cost of investing and may easily find better returns under more liquid, hence lower risk, conditions elsewhere.

Refinance at Today's Low Rates! 'Amenity Up' to smart-market your vacation rental property

Investing in Real Estate

Costly Investment Mistakes

Nancy Osborne, Nancy Osborne has had experience in the mortgage business for over 20 years and is a founder of both ERATE, where she is currently the COO and Progressive Capital Funding, where she served as President. She has held real estate licenses in several states and has received both the national Certified Mortgage Consultant and Certified Residential Mortgage Specialist designations. Ms. Osborne is also a primary contributing writer and content developer for ERATE.

"I am addicted to Bloomberg TV" says Nancy.

Fannie Mae & Jumbo Mortgage Rates

Just One Click! = Current Rate Chart

Pennsylvania Mortgage Rates Current Mortgage Rates - Hawaii Current Mortgage Rates - Alaska West Virginia Mortgage Rates Virginia Mortgage Rates District of Columbia Mortgage Rates Maryland Mortgage Rates Delaware Mortgage Rates New Jersey Mortgage Rates Connecticut Mortgage Rates Rhode Island Mortgage Rates Massachusetts Mortgage Rates New Hampshire Mortgage Rates Vermont Mortgage Rates New Hampshire Mortgage Rates Maine Current Mortgage Rates Vermont Mortgage Rates Current Mortgage Rates - New York Current Mortgage Rates - Michigan Current Interest Rates - Wisconsin Current Mortgage Rates - MINNESOTA Ohio Mortgage Rates Current Mortgage Rates - Kentucky Current Mortgage Rates - Indiana Illinois - Current Mortgage Rates Current Mortgage Rates - Iowa Missouri Mortgage Rates Current Mortgage Rates - North Carolina South Carolina Mortgage Rates Current Mortgage Rates - Florida Current Mortgage Rates - Georgia Current Mortgage Rates - Tennessee Current Mortgage Rates - Alabama Current Mortgage Rates - Mississippi Current Mortgage Rates - Louisiana Current Mortgage Rates - Arkansas Current Mortgage Rates - Oklahoma Current Mortgage Rates - TEXAS Current Mortgage Rates - New Mexico Current Mortgage Rates - Arizona Current Mortgage Rates - Kansas Current Mortgage Rates - Nebraska Current Mortgage Rates - Colorado Current Mortgage Rates - Wyoming South Dakota Mortgage Rates Current Mortgage Rates - North Dakota Current Rates - Montana Idaho Current Rates Washington Mortgage Rates Current Mortgage Rates - Oregon Current Mortgage Rates - Utah Current Mortgage Rates - Nevada Current Mortgage Rates - California

Start by selecting your state

Get the Updated and Improved Mortgage Rates App from

iPad for Mortgage Rates

Refinancing: Getting Started

Refinancing Info and Advice

Refinancing: Selecting a Loan

FREE Mortgage Rate Widgets
Your State's Rates or National Rates
Get this Widget for any State you want