How-To Guide - Is Property Location Right For You?

How-To Guide - Is Property Location Right For You?

If I knew what I know now, I would never have voted for the war.

Ken Lucas

To me, the biggest source of income is still movies. Nothing - shares, financial speculation, speculation of real estate or companies - make more money for me than making movies.

Jackie Chan

I have 1900 units, why do I need a 401K?

Robert Kiyosaki, the latest interview of Time Magazine

To yourself is true, and it must follow that night of the day, you can not be false to any man.

William Shakespeare

From Robert Kiyosaki to Donald Trump, from Robert Allen Carleton Sheets, from Dolf de Roos to Diane Kennedy, they invest in real estate as a way for average people with time, money and patience to build wealth.

But investing in real estate real estate vehicles for everyone? If this were a one-size fit all over the world, the answer would be yes. But then the stocks would be the perfect investment vehicle for everyone and the discussion would end there. Ive had investment properties since 1994. Ive had tenants trying to tie in my properties, Ive been sued, Ive got a unit vandalized, someone drove in one of my buildings and I gave through my fair share of property managers.

If I knew then, what I know now would I have bought my first property? The answer is yes. Real estate has done more for me than the stock market has less overall financial risk despite headache and they have been many.

Five ways to know about real estate investments are right for you.

  1. Are you a good boss for your personal resources or do you have significant amounts of short-term debt? If the answers are no and yes, in that order, do not invest in real estate until you address these issues. Real estate is illiquid. Once you have purchased, the duration of your new property can be significantly longer than you expect. This means that your potential exposure to unforeseen expenses on your property may be longer than expected. Significant amounts of short-term debt or inability to plan your finances in anticipation of expenses can make your property investment an economic nightmare.
  1. Are you team players and can you captain that team? Investment in real estate means collaborating with others to ensure your success and acknowledge that your partners may know more than you. You will meet brokers, property managers, lawyers, practical men, plumbers, electricians, contractors, roofers, inspectors, mortgage brokers and assessors. If you are a control freak, you prefer to work alone or can not be directly in your communication when working with people, investment in real estate can not be right for you.
  1. Do you understand what investment you are going to make? Will you invest for cash flow or speculate for estimation? Do you have the analytical tools needed to help you build a pro forma for the property you are buying?
  1. Will you really understand that real estate building in real estate occurs for many years and that you must survive your first real estate to build wealth? Over 20 years ago I began to bake bread. The guidebook I bought contained a loaf for learning, a basic loaf that I could practice to mix, and still expose an edible product. Your first property will be buildings for learning. As you move beyond the original learning curve, you will move on to create wealth. In some markets, real estate can produce estimates of returns beyond expectations and create the illusion that real estate produces instant cash. In my life I have seen two such markets. Frankly, I would not want my future economic well-being to rest on my ability to time markets. Sophisticated investors have as their core investments, cash flow characteristics, properties that occur in hot or cold markets.
  1. How do you respond to unpleasant business news? Is your overall reaction of reaction posing in a sense of helplessness or becomes a problem solver? Being able to solve problems is the key to having successful business and investing in real estate is a business. Real estate is also a community of people, which means that your tenants are people and the service personnel who will work with and market your real estate are people. If someone elses failures affect you with moral anger and heart, investment in real estate is not for you. Tenants will not pay the rent and you will have to postpone them, your property manager will charge you on the market or over the market for repairs and will not properly market your properties to keep them full.


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