That’s right, you can earn a lot of money by investing in real estate. However, many investors are not. And when you look at your real estate investment strategy, it is not surprising.
The problem is that the so-called real estate investment gurus washed their brains. You know what I’m talking about. Those who tell you that for a few of your dollars earned with so much effort, they will teach you all their main secrets to succeed in earning millions.
They will tell you that you do not need a job, money or credit. Just pay them and they will show you how to invest in real estate. Do what they say, follow their real estate investment strategy and your life will change forever.
Well, I have bad news for you. In most cases, this is the worst real estate investment strategy you can follow.
Make no mistake, it’s okay to go to seminars, buy books and audio products if you use this information to learn certain techniques, financing options, tax laws and other ways of investing. In fact, you should do it because it will make you more creative and you will become a smarter real estate investor, but it is not the most important thing you should do.
>>> The most important step to invest in real estate
Before you start investing in real estate, you must sit down and create a very specific plan of what you want the result of your real estate investment plan!
I know it is not very exciting, however, if you do not know why your investment and the overall result you want, how do you know if you are making a good or bad decision?
>>> Two important questions
The only reason to invest in real estate is to make money. There are two important questions you should ask yourself.
1.) When do you want the money and how much?
2.) What are you willing to pay to get this result?
The answers to these questions will help you determine your real estate investment strategy.
Let me give you several examples.
>>> Buying and selling strategy
If you want the maximum amount of money in the short term, you must buy real estate with the intention of a quick sale and a profit. This can be the purchase of fixers or looking for properties below the market that you can sell quickly for profit (what is known as flipping).
To do this, the price you will have to pay is your time to search, analyze, repair, finance and sell the properties. Once you have sold one of your properties and have made a profit, you must go out and repeat the process over and over again to continue making profits.
A problem with this strategy is that when you stop buying and selling your earnings they stop. Therefore, it is important to make sure you take part of your earnings and invest in something that produces the income you will need and want later in your life.
>>> Purchase and conservation strategy
This strategy involves buying properties, renting them and making tenants pay for the properties. Once you pay for the properties, you will continue to have rental income for the rest of your life.
The price you pay in this strategy is not just the time to search, finance and analyze, these are the problems that can arise when you have tenants. Therefore, you will need a type of system to manage or you can hire a management company to do so.
Personally, I like the strategy of buying and maintaining because it accumulates assets and income that will return you for the rest of your life. To manage the administration part, you must create a system of policies and procedures.
Whether your strategy is to buy and sell, buy and maintain or perhaps a combination of both, the key is to plan what you want your final result to be.
If your final result is to have an income of $ 100,000 a year without any work, you can choose to buy and own enough rental real estate that will allow you to do so.
In summary, the worst real estate investment strategy of all time is not taking the time to decide exactly why you are investing in real estate and what you want when you are done.