Houses are quality of life purchases, not usually prudent investments, especially if there is a mortgage involved. To wisely invest in a house, the following variables should be considered
1. Investor should purchase and rehabilitate using all cash, no mortgage. Margins on "houses" are usually slim. A mortgage further reduces the margin and adds pressure because of making payments or having to pay back the mortgage in full in a short period of time. So if you need a mortgage to invest in a "house", Its a bad deal.
2. If there is no mortgage involved then a house may be a worthwhile investment. If you can buy, rehab and maintain the house using your cash, it will be profitable.
3. The house you invest in must be bought significantly below market value. This way if it a flip, there will be plenty of room to make a profit.
Mar 22, 2012