Is there really a 100% safe way to invest in real estate? No, there is NO plan that will guarantee your success. No one can guarantee that you will make a profit. However, if you follow these guidelines, you will have a greater chance of being successful. Instead of potentially making costly mistakes, you will be able to generate a steady stream of extra income and you will be building your equity.
The following topics will be covered in this series of articles:
Setting clear investment objectives
How to find profitable investment properties
How to mine properties for profit
How to make the initial offer
Navigating the financial maze
Closing the Sale
How to select a remodeling contractor
Renters, Renters, Renters
Tax Time – Pay uncle Sam
Miscellaneous real estate investment factors
Let’s start on the road to discovery:
Setting Clear Investment Objectives
Start with a set of clear objectives for any property you intend to buy. You might be asking what is the relationship between real estate investing and objectives. The investment objectives will give you the track to run on. There is a direct relationship between the level of clarity about what you want and virtually everything you accomplish in life. Successful men and women invest the time necessary to develop absolute clarity about they really want. It is like designing a detailed blue print for building a custom home before they begin construction. Like a blueprint for a building, your investment goals must be written down on paper. Do NOT skip this step or you will be helping some else accomplish their objectives. We have many more Investing Help Articles Now Available.
Start by writing your investment goals or strategies on paper. Which money making strategy is best for you depends on your tolerance for risk. You might be happy making only 15% on a quick sale, or you may need $100,000 a year to maintain your current living style. You might want to build your current net worth over time, getting continuous appreciation on your properties, and generate some extra income or enough rental cash to become financially independent. Keeping a clear picture of your investment objectives will increase the likelihood of finding the right properties.
Your investment objectives will also need to include some of the following items: What kind of home should it be, Single family vs. multifamily, condo or detached, how many rooms will the property have, a good or medium neighborhood, age of the property, who will maintain your properties, high priced or low priced. You will need to determine how long, you want to hold the investment property. Are you planning to flip your investment in 5 years or less? In this case, you might want maximize your monthly return by obtaining a low variable rate for 5 years. If this is your objective, it might be necessary to take some precautions in order to avoid getting burned in the fifth year. For instance, start looking to refinance the mortgage loan in the middle of the fourth year.
If your aim is to hold the investment property for 20 or 30 years, then the approach needs to be different. You can still choose to pay off the property in a short period of time. In this instance, you might want to get a 15 year mortgage. Another important factor that needs to be taken into account is the age of the investment property. It is a good idea to select properties that are under 10 years old in order to avoid that high maintenance fees that come with an older home. Please remember that the secret to long term real estate investing is renting the property for less or close to your yearly expenses.
Do not forget to make your objectives SMART:
1. Specific – Your objectives need to specify what you want to achieve in detail.
2. Measurable – You should be able to measure whether you are meeting the objectives or not.
3. Achievable – Are the objectives you set, achievable and attainable?
4. Realistic – Can you realistically achieve the objectives with the resources you have?
5. Time – When do you want to achieve the set objectives?
We have many more Investing Help Articles Now Available.