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Need text here...can be less frustrating, less time consuming and less costly if you're prepared.

Is it time to cash out?
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7. Do you live in the house?
Is this is a second, third or ninth house that you bought as an investment or your primary residence? While most people make a healthy profit when they sell if they stay in the home after a couple of years, practically speaking that should take a back seat to having a good place for you and your family to live.

An investment home is a totally different proposition. This time, you want to look strictly at the dollars and cents. Can you afford to make the loan payments if rates increase? Do you have fixed-rate financing or will you have to try to predict how rate increases could affect your payments?

How long have you had the house? Can you make the payments comfortably or are you stretched to the max? Were you able to get a conventional loan or a product that could leave you vulnerable if the value of the property decreases? Do you have a lot of equity to act as a cushion against possible decreases in value? Can you afford to keep making payments if the house stands empty for a few months or if a tenant gets behind on rent?

"Investor-prospectors are the ones that will be more susceptible to a drop," says Retsinas.

Guttentag agrees that devaluated home prices could be a real problem for speculators, especially if they are financing a large portion of the purchase price with an adjustable-rate mortgage or an interest-only loan and counting on turning the property fairly quickly. "They're the ones who are going to get hurt, and the lenders who financed them are going to be hurt," he says.

You also want to look at the reason behind any potential or perceived value drop. If fewer people are buying homes in your area, and you can rent your property at a good price, your home may never sit vacant. But if your area is becoming a ghost town because jobs are leaving the area, that could mean you need to sell.

And the more houses you have, the more complicated it can get. "The more leveraged you are, the worse your position," says Mike Schenk, vice president of economics and statistics for the Credit Union National Association.

Are you banking on making money from equity or rent? And if the numbers no longer work, what's your exit strategy?

Someone buying a home "primarily for investment purposes in 2006 may be disappointed," says Retsinas. "But if you're living there, you can probably ride out the cycle. The dividend is the bed you sleep in at night."

Dana Dratch is a freelance writer based in Atlanta.

-- Posted: March 1, 2006
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