Real Estate Investing is the craze today with people involved in the
Carlton Sheets program spending money on courses to find out how they
can make money in no money down real estate investing. This article
hopes to help you create some sort of mental picture of five key
principles that can help you make more money with real estate today.
Principle #1- 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 #2- Monitor Cash flow
Real
Estate investment typically have a monthly rental income which then is
used to pay for mortgage instalments and other problems with the
building like a roof leak. You would thus have to keep a close watch on
interest rate hikes since they can potentially erode any calculated
return on investment quite quickly. Once you have enough cash coming
in, it is suggested that you then keep some of it in a rainy day fund in
case some of the rental tenants do not renew their property and then
take the rest and consider investing in another real estate investment
property.
Principle #3- 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 advisors and employees
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 #4- 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 #5- 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.