One of the most frequently asked questions by real estate investors is, ?What kind of property should I invest in?? or ?Which is better ? single family homes or apartment buildings?? or ?How about office buildings?? Suffice to say there are many different variations of this question, but you get the picture.
My answer: It depends.
Why do I say this? Am I dodging the question?
Absolutely not. The reason ?it depends? is because every investor is a little bit different. Every investor is at different stages in life. And every investor has different goals that they want to achieve through investing in real estate.
First of all, if you are reading this article, you are interested in the subject of real estate and growing your wealth through this particular area of investing.
The more important question investors should ask themselves is, ?What goal am I trying to achieve by investing in real estate??
For example, a person in their mid-50?s that has a substantial amount of money accrued over time just loses their job. That bites, and they decide they want to get involved in real estate as part of the solution of replacing the income from their job.
Does this person want to go out and look for houses to buy, invest tens of thousands of upgrades, then ?flip? for a possible fast profit? Probably not.
They will be more interested in acquiring a property that will provide a predictable stream of income into their bank account, month after month, and not be too concerned with the possible leaps of value in the short term. It may be more prudent for them to search for a newer apartment property that has management in place and a track record of producing $X amount of income, month in and month out.
I think through this example you can see that if you think about where you are in life, and what you want to achieve through your investment, you can focus in on those properties that will help you achieve those goals.
The biggest mistake I see investors make is month #1 they are focusing on a ?no money down? deal and finding something they can get with no money out of pocket. Well, let me tell you, if you are only focused on ?no money down? deals, you will miss A LOT of really great bargains out there Month #2 comes along and they decide they want to ?flip houses? for a fast profit. Month #3 comes along and they are now looking for a commercial strip mall because it will be less work than flipping houses.
You get the picture.
First and foremost, sit down and decide what you want to achieve out of your investment. Take some time to do this, and really put some thought into the matter. What parameters are you looking for? What type of return? Are you looking for large equity jumps, or a steady monthly cashflow income stream?
Set your goals first, and let those goals decide which asset class will get you there in the fastest manner possible. Then you will be able to focus your efforts on finding those properties that will help you get there.
It does not sound very glamorous or even exciting, but do not miss this all-important step. You will be much further ahead than most investors out there because you will have some focus to help drive your investment team in the direction you want to head.
The next step is that once you have made the decision ? to take action. Get out there and make offers on the properties that make sense to you and your investment parameters. Just doing this will place you much further ahead than 90% of your competition.
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