« on: April 30, 2008, 04:05:07 PM »
It means taking most of the equity out of the old properties to pay for down payments. What he means by difficulty though, is you need to make sure you don't end up with a reverse mortgage or lock up too much money in down payments and not be able to make the loan payments. RE essentially lets you play with a lot of other people's money in order to buy assets that (generally) appreciate, and on top of that, you can get rental income from them. Mortgages have their own costs though, renting has its costs as well, so you need a certain level of cash-flow. Also, not all "oppurtunities" are good oppurtunities at all, including foreclosures. Essentially there are many properties that do not properly meet the market, so you have to have a good grasp on what your direct costs will be (taxes/repairs/closing costs) and what your potential costs will be (not finding a renter/no renter for portions of every year/a renter who doesn't pay and you have to evict).
Regardless, it isn't something you can just jump into, and that is just the financial aspect. It is also extremely hard managing property from far away unless you have someone nearby to show the rentals, close the deals, take care of repairs/complaints and generally be able to checkup once in awhile to make sure the place isn't getting trashed.