What Greece can teach us about real estate

For the past few years, the entire world has been made aware of the situation in Europe regarding their ongoing fiscal problems.  There is talk about the potential breakup of the Euro-zone, bailouts, IMF intervention and much more.

To me, the whole situation can be summed up simply and very clearly. If a person, corporation or entire country spends more than it makes for a short period of time it must address that issue. Nations can postpone a default moreso than corporations and individuals but the end is the same. Greece spends more than it earns and for that reason, there is huge turmoil being heard worldwide.

For someone who owns a property, two five or more, the lesson here is that you should always buy positive cash flow properties that put money in your pocket and don’t take them out.  If Greece had more money coming in than going out, this would not have become a problem.  If you are considering buying a property in the hopes of equity appreciation while losing money on a monthly basis, consider the lessons from the Euro zone as an example of what can happen.