Giving A Third Chance
Curt's new tenant has a checkered past and he doesn't want to evict her. Does his idea for helping hold water?
QUESTION: Curt has a duplex that he’s renting out. He has a tenant lined up and wants to balance risk vs. reward. This tenant has been evicted twice, so they plan to raise the deposit. They are thinking of sending her through Financial Peace University and factoring that into the rent situation. Is that a good idea? Dave stresses how vital it is to correct a core issue.
ANSWER: It depends on how much you love real estate investment. I love real estate and buying investment property and don’t mind the hassle that goes with it. But you have to deal with renters and have a good temperament with them. Put 15% of your retirement into mutual fund and fund the kids’ college and get the house paid off, then talk about this. Then you just ask yourself what you want more money invested in. Mutual funds have a lot less risk.
I don’t think you should be all in one or the other. I think you can settle on a percentage that you both like, and then you’ll be all right. But remember, you have to be able to lay your hands on some cash. If you are more than 75% involved in real estate and 25% in mutual funds, you become too non-liquid and that scares me. Talk about which you like and find a good balance between the two.