An easy round for stocks? Think about Enron, Tyco and WorldCom. All were widely followed by investment professionals, their results audited, their financial reporting regulated by the feds. And now their CEOs are in jail and investor losses total in the tens of billions. If Wall Street failed to notice anything amiss, how would you?
Real estate, on the other hand, is tangible. You can check the basement, consult a termite inspector and make sure that nobody is building a pig farm next door. Of course, if you've watched Flip This House and Flip That House, two cable-TV programs that feature people trying to get rich quick by buying and fixing up properties, you know that savvy folks often learn too late that the plumbing is shot or that vermin ate the wiring.
Still, John T. Reed, editor of "Real Estate Investor's Monthly," insists that such mistakes are avoidable - just not easily avoided. "You can verify the property taxes, the cost of utilities and everything else about the property," he says. "Those are knowable."