Sometimes I think I go too far in warning prospective newbie investors about the potential downsides of owning rental property, but articles like this one in todays Austin Statesman remind me that stern warnings are in fact appropriate. To be clear, I am a happy real estate investor and have helped many, many investors successfully buy, lease and manage rental homes in Austin, but one never knows when the nightmare may begin. It can happen to any investor at any time. Normally, it’s a bad tenant causing problems, or prolonged vacancy, or a major repair problem or condition with the property, but other unexpected events can happen as well. People who are not financially, mentally and emotionally ready for the bad times should just stay out of real estate investing and stick to the stock market.
Today’s article discusses how the almost constant rain during June and July has been eroding back yards of homes that back to creeks and streams in Austin. This has left one investor with a major problem. The article states:
Tuan Nguyen bought the duplex on Spring Meadow Road two months ago, hoping to fix up the neglected property that abuts a tributary of Williamson Creek and turn it into a rental property by the end of the year.
But after this summer’s heavy rains, he’s watched the creek swallow most of the backyard.
“The fence is gone: It slid into the creek, and it took everything else with it,” Nguyen said as he kneeled on the ground where the eroding creek bank comes to within a couple of feet of the duplex. “I’ll never be able to rent the property like this; it just keeps getting bigger.”
And, as the article continues, we can add another reason we keep buyers out of the clay soil of East Austin: