10 biggest mistakes of novice investors

10 biggest mistakes of novice investors: "10 biggest mistakes of novice investors
WASHINGTON -- Aug. 4, 2005 -- Real estate has become the tech stocks of the 2000s, the darling investment that everyone seems to think will be their ticket to easy wealth. And why shouldn't investors be snapping up cute little cottages? After all, mortgage rates are low and the housing market is hot. How hard could it be? Slap on a new coat of paint, put some flowers in pots by the front door, put a 'For Rent' sign in the yard and start counting the cash.

It's a popular notion. The National Association of Realtors reports that nearly a fourth of all the houses sold in 2004 went to investors; about 80 percent of investment properties are existing single family houses.

If they're looking for rental income -- and most investors are, according to the NAR -- buying a single-family house may be their first mistake. All it takes is for a property to sit vacant for a couple of months -- or a tenant to run out on the lease -- to put a new real estate investor in a financial bind. Far better to buy multifamily units, such as duplexes.

That way, you can live on one side and have the rent from the other side pay your mortgage. Or, rent out both sides and give yourself some breathing room in case one tenant moves in the middle of the night without paying his rent.

'I'm not a proponent of single-family units,' says John Anthony, president of the Pennsylvania Association of Mortgage Brokers. 'A first-time investor should look at (multifamily units of up to) four units to limit their risk.'

If you're still convinced that investing in rental real estate is the road to riches, at least go into the proposition with your eyes (and your wallet) open. Here are 10 common mistakes made by new real"