Five Key Principles To Real Estate Investment. Principle I: The money is made in the purchase. Real estate investing is like value investing in stocks and you want to purchase the real estate during a period of a real estate slump. The reason for this is so that you can get a huge capital appreciation when the real estate market heats up again. Spending time doing real estate valuation is critical since if you cannot satisfy yourself on the maths that is a viable proposition, there is no way that your Real Estate investment would be a good one. Principle II: Monitor your Cash flow. Principle III: Leverage on other people’s time Remember that no one can do everything, so the key is to focus on what you do best. If your strength is in negotiating deals, spend time looking for property and then get professionals and contractors to handle all the rest of the deal for you. Similarly, if you are good at decorating property, then find deals and focus on the interior design of the property. By focusing on what you do best and getting other people to do the rest of the work, you are leveraging on their time and you can then make more money from each new Real Estate investment that you undertake. Spend your time to build your team of advisers who work for you and you will see your profits start going up. Remember that by rewarding them financially, you will get a group of dedicated people helping you make more money from your real estate investment. Principle IV: Learn how to use leverage with a good rainy day cash balance. Did you know that many real estate investors started off with very little money to invest? Even large real estate developers like Donald Trump have learnt the power of leverage when investing in property deals. You want to leverage as much as you can so that you can control property worth many times more than what you own. Remember however to keep a rainy day fund containing a portion of the rental payments so that you can hedge yourself against a possible period where unit occupancy of your real estate investment is low. Leverage when used well can make you lots of money but if managed badly, will bankrupt you. Thus planning your cash flow and learning how to use debt is critical before you start serious Real Estate investment. Principle V: Spend time networking with real estate professionals. Do you want the latest real estate investment deals? The best way to learn of them is to break into the local real estate professional group and make friends with them. Learn some real estate investment lingo and spend time making friends with them because they are your eyes and ears on the ground and they can tell you about recent developments and changes in rental, property and infrastructure of their geographical location. Having the first player advantage is what many large Real Estate investors have and by spending time to network with real estate brokers, you will substantially close the gap. In conclusion, spend time looking at these five principles and determine how they can be applied to your real estate investment and you might start seeing an increase in your Real Estate income.
Posted on: Fri, 16 Aug 2013 10:25:18 +0000
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