Successful Real Estate Investing
One of the best roads to wealth in America has always been the acclimation and development of good, solid, income-producing real estate. Real estate ownership is one of the best ways to achieve financial independence for the average person. But in order to be a successful real estate investor, you are must become above-average in your knowledge and understanding of how the real estate market works.
There are five basic requirements that you must follow to succeed in real estate.
1. Write out clear and specific goals that have time lines on them. Set a goal for the exact type of property you are looking for. Do want a single family property? A duplex? A four-unit property. You must be specific. Set a goal for getting the money you'll need to purchase the property. Always make sure your goal has a time line for when you will acquire the property. Will it be six months or a year? Set goals for the amount of real estate you intend to purchase in the next three, five, and ten years. The very act of writing out set goals for yourself in real estate will make it much more likely that you'll have the success you are aiming for.
2. Write out a detailed plan of action, listing everything you are going to do, organized by priority. The combination of goals plus detailed plans will give you a blueprint for real estate accumulation that you can begin to follow on a day to day basis.
3. Make a plan to learn every detail of the real estate business. Because the potential rewards are so high in real estate, they will go to those who have done their homework and paid their dues. It's very important for you to become an expert at real estate before you begin investing your time and savings in real estate acquisition.
4. Be prepared to back your plans with hard work, sacrifice, and persistence. Going into real estate is very much like starting a business. There is a tremendous amount that you have to learn and you can only learn by experience. There will be ups and downs, successes and failures, and you must be willing to persist patiently throughout, knowing that you will be successful in the end.
5. If you are really serious about building something lasting and worthwhile in real estate, resolve to get into real estate for the long term, for a minimum of ten to twenty years. Real estate investment is not something that you jump into and out of. It is something that you step into very carefully, and should be prepared to hold onto for a long time.
Many people who purchase real estate, hold it for a long time and then sell it just before it starts to rise rapidly in value. They become impatient when they hear about other people making quick or easy money by flipping real estate properties.
The definition of investment real estate in its simplest term is: "Real estate is its future earning power." Let me put this another way: "Real estate is nothing more and nothing less than its future earning power, its value at some future date." In other words, the value of any piece of real estate is determined by the income that can be generated by that property when it is at its highest and best use, from today and on into the indefinite future.
An important question that you should always ask when you are considering any real estate investment is, "When and how will income or wealth be generated on or by this piece of property, and in what amount?" The correct answer to that question tells you how much the property is worth today and how much it is likely to be worth in the future.
Even though interest rates are at all time lows and property values are increasing at record levels, there are still foreclosures happening at record levels today, because of so many people losing their jobs. Having said this as a warning, there are many things that you can learn and do, starting with very little money, to begin building your financial independence in real estate.
If you do not have much money but have lots of time, and you sincerely desire to enter into the real estate field, the simplest way for you to start is to buy homes that need work and fix them up, thereby increasing their value. This is where many successful real estate investors and entrepreneurs begin their careers.
Here are six basic steps you need to follow if you are going to buy properties and fix them up.
1. Do your market research thoroughly and look at houses until you find one that is under priced relative to the neighborhood, because it is run down and needs a lot of work. A house that is under priced is one that is selling for 20% or more below what similar houses are selling for in the same area, based on the cost or sales price per square foot. For you, this type of home could be what is called a "Sleeper." It can be more valuable than it appears on the outside.
2. Purchase the house at the lowest possible cash down-payment and get the seller to carry back a second mortgage or deed of trust for the property. Your ideal purchase of investment real estate is always to get the very best price and terms. Price and terms are often more important than any other single factor. If you can get a low enough price and generous terms you can make almost any property into a successful investment.
3. Move into the house and begin working on it on the weekends to renovate and refurbish it, doing all or most of the work yourself. Many husbands and wives have launched themselves toward financial independence by working as a team to buy and fix up houses, approaching this as a family project.
4. When you have fixed up the house and yard so that it is attractive again, you can then do one of three things. You can sell the house for more than you paid and take the profit from the sale and buy another house to renovate. You can rent out the house at a rate that covers your mortgage payment and hopefully gives you extra cash flow. Or you can rent out the renovated house and then refinance the property, often for as much as you paid for it, based on the higher earning power of the property when you rented it.
5. You can then repeat this process with another house, again doing the renovations yourself until you have fixed it up and you are ready to sell, rent, or refinance the second house as well.
6. As you increase your assets, your cash flow, and your experience, you move up to buying and fixing duplexes and eventually apartment buildings.
There are two main advantages to buying properties and then fixing them up yourself: First, you can do it while you keep your full-time job, continuing to generate cash flow from your job for repairs and renovation. Second, you can start small, with little or no money, little or no risk, and expand your activities as you gain more knowledge and experience.
Making money in anything, especially real estate, is hard work and requires persistence. Everyone with a property for sale wants to get as much of your money for it as he or she possibly can. Your job is to see that they don't. So, if you are willing to do your homework and take your time, you can make prudent and profitable real estate purchases and sales.
You make your money when you buy real estate, not when you sell. You make your profit in real estate by buying right, by buying the right property at the right price and at the right terms. When you sell, you simply realize the profit that you made at the time of the purchase. Another important rule for investing in real estate is this: don't become emotional about a property that you are purchasing for investment. Always look at the property from the viewpoint of a critical purchaser.
Purchasing real estate of any kind requires careful thought and analysis. Just remember that you are buying the long-term future earning power of a piece of property. You are purchasing the property as an asset and nothing more. Always remember, real estate is only an asset if it puts money into your pocket.
These rules are all food for thought if your are planning to become a real estate investor. These are some basics that you need to know to get started in the field of real estate. Read books and attend seminars on a regular basis in the field of real estate. Go out and look at properties every week that are for sale, even if you are not ready to buy. By doing this you will be gaining valuable experience. Nothing can take the place of knowledge and experience, especially in the field of real estate.
Millions of men and women have become financially independent by investing in real estate, and with the proper knowledge and experience, there is no reason why you cannot do it as well.
Copyright© 2005 by Joe Love & JLM & Associates, Inc. All rights reserved worldwide.
Joe Love draws on his 25 years of experience helping both individuals and companies build their businesses, increase profits, and achieve total success. He is the founder and CEO of JLM & Associates, a consulting and training organization, specializing in personal and business development. Through his seminars and lectures, Joe Love addresses thousands of men and women each year, including the executives and staffs of many of America's largest corporations, on the subjects of leadership, self-esteem, goals, achievement, and success psychology.
Reach Joe at: joe@jlmandassociates.com
Read more articles and newsletters at: http://www.jlmandassociates.com
Related Articles:
Marketing To Your Online Customers ? Las Vegas Style
I like to go to Vegas for the weekend and blow off steam. I run an online marketing group out of Chicago and Detroit so catching a quick flight out there is no big deal. Every time I go out there I am always amazed at the details of the overall customer experience. There are systems put in place, however slight, that are designed to get the customer dollar at just about every turn.
Nexoor Launches New Video Web Site in Your Neighborhood at the Broward County Chamber of Commerce's Largest South Florida Business Expo
Nexoor produced the exclusive video which captured the event with 540 exhibitors and thousands of South Florida Business Executives. The Broward County Chamber of Commerce was very satisfied with the video which thousands of members were directed to see online, on Nexoor.com.
Find Bargain Real Estate Online on Fizber.com
It's a good time to go bargain hunting for worthwhile foreclosed properties (http://fizber.foreclosure.com/) in your area
Miami Real Estate: Some Helpful Tips About Lease/Options
Buying a residential property is not a likely prospect for everyone. Perhaps it could be due to lack of funds or maybe because of the need to relocate frequently. Whatever the reason may be, you still have a myriad of rental options in the Miami real estate market.
Real Estate Foreclosure Services - Arizona Short Sale Office Offers Foreclosure Help To Home Owners
Arizona Short Sale Offices Offers Home Owners Real Estate Solutions For Alternatives To Foreclosure. Behind on Payments, auction date has been set, owners of real estate has options to stay in your home. Phoenix Foreclosure Assistance is Available through the Arizona Short Sale Office which offers government assistance through FHA secure programs.
Landscape Designers and Builders Learn there's More to Growth than Sunshine and Water at Marketing Seminar in Seattle
Marketing seminar, presented by the Washington Association of Professional Landscape Designers (APLD), is to be held in Seattle on April 12-13, 2007. Marketing experts and industry leaders will provide practical and cost-saving techniques designed specifically for landscape designers and builders to help them grow their businesses.
Getting The Golf Ball In The Air With Physics
Sir Issac Newton was one of the world's most influential thinkers. He tackled what most people would consider to be complicated topics.
Martini Promotions, Crazycordz Wins 1st Place for Best New Product at the 2007 PPAI Expo Las Vegas
Martini Promotions, line name Crazycordz, unveiled their newest and hottest product "Winning Streaks" at the 2007 PPAI Expo taking home top honors with their 1st place trophy win for Best New Product. The annual show which attracts over 20,000 invitees was held in Las Vegas the first weekend of January 2007.
New Website from American Real Estate Data Services (AmREDS) to Revolutionize Real Estate Industry
New website offers resource for real estate professionals looking for qualified real estate buyers.
Before Signing a Las Vegas Wedding Vendor
Don't sign any contracts until you read this. Las Vegas weddings can be wonderful but they can also be deadly without the proper vendors. Because Las Vegas is the Las vegas wedding capital of the world, fraud can be as prevalent as the phenomenal vendors out there. Here's how to tell a flawless vendor from one that could ruin your wedding day.