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I wish I could help you, but for others:

1] Failure to use the advice of professionals often costs "do-it-yourselfers" fortunes. I have been advising against direct real estate investments for about one year now. I was advising FOR real estate related investments in 1999-2004/05 period. There were four mega-waves all happening together that pushed real estate demand higher, and nearly all these factors have run their course and are reversing, slowing or flattening.

2] This couple purchased the second condo for an "investment". Not trying to play Monday-morning quarterback here but the typical Latin America fund (iShares "ILF", for example) was up about 50% last year and over 100% over the last two years. $40,000 invested here would have grown to $80,000 in the last two years, a far different scenario than what the condo deal turned out to be.

The point I am making here re the Latin America fund is not that it would have been wise to mortgage $20,000 to invest in a stock index, but that TRENDS were different--real estate was at a peak and due to come down (or demand come down) for about four major reasons, and by contrast, stocks in general and international (and small cap and mid cap) indexes were doing VERY well and in EARLY stages of an upturn. Real estate is late stage right now.

3] Major investment decisions should be made in concert with a highly qualified investment advisor--with real estate, that is NOT a real estate person, but a true adviser qualified to advise across ALL investment classes.

The "Money Magazine", discount broker, do-it-yourself push, etc. is quite harmful to the typical person. Most investment variables are much more complex than what most people believe.

In my practice, you would not believe the percentage of investors I have advised who have, over the last five years, had most their 401k, IRAs etc. money invested in large cap stocks, even though large cap stocks have trailed badly mid and small and international for better than six years. People think they know what they are doing, but most do not have a clue about all the factors involved in what makes things tick now versus earlier versus projected later.

I can't help this person now, but hope that some future "do-it-yourselfers" that lack sufficient knowledge take warning. Always better to seek sound advice before taking such great risk.

NOTE: All points here are general and used for example purposes and are not to be taken as specific advice for any one individual.

Anecdote.

We sold our large house last March. We realized it was not a good long-term investment as the carrying costs would be not worth it over the long term. (the size of the home being the issue, as well as the way it was built).

I went to the lawyer's office to close and he said how good real estate was as an investment. I said I was looking to diversify. He grinned to my real estate agent next to me.

She said later in the car that they had liquidated everything they own, including their 401Ks, to buy a beach house with a no-doc loan.

Oh well.

We are currently renting and hanging onto the cash. There has been a 400% increase in inventory here in the exurbs of Northern VA so we have much more to choose from if we want to buy again. But maybe we'll wait. Somehow I don't feel the urge just yet.

Tread,

Are you "Fee Only". Fee Based, or Straight Commission for you compensation.

Yes asset allocation and the total picture (including real estate) are often overlooked and even poo-pooed by some investors. Mankowitz, Tobin, and Sharpe all Nobel Laureates gave us modern portfolio theory then ergo Asset Allocation. With brain power like that, those that lend their ear to what they have so say, may in-fact be showing they possess something sometimes lacking these days in our culture; wisdom.