Imagine that you have $100,000 in wealth that you are ready to invest in real estate. You have accumulated this $100,000 over the course of about 10 years, and it amounts to the sum total of your worldly wealth outside of your home equity and/or retirement accounts.

Ready for a bad plan?

Invest all of that money into a $400,000 property producing a modest cash flow in a solid location and resume saving at $10,000 per year.

Why is that a bad plan, in spite of you getting some cash flow and reasonable prospects? Well, it’s a bad plan because you only win if the market goes up. You’ll survive in a flat market. But you are up a creek without a paddle if the market goes south.

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