Updated: Mar 1
You are exploring investing in real estate and are doing your due diligence. If it wasn't true, you probably wouldn't be reading this. As with any investment you should set a few goals, in the very least.
photo by Vinicius "amnx" Amano
You should have a long term, living plan. This should be almost like a business plan. It should outline what you are looking to do with your investment campaign, whether you are renting a room or looking to add a thousand doors to your portfolio. You should have a clear and measurable plan, in order to make sure your portfolio is performing how you would like. You should ask yourself some or all of the following questions:
Why am I investing in real estate?
How much passive income/cash flow do I need per year?
What will I do with this income?
How can I find the best investments?
How am I going to pay for these investments?
What can I do to fully understand the risks involved in the property I'm interested in?
What are the tax implications?
What are the costs to keep the property in good shape?
You can continue to add to these questions. I highly recommend doing some research and find a good broker to help you, depending on your situation.
Your first thought should be to the risk you are willing to take with your capital. Real Estate Investing affords several different types of strategies, carrying with them several different levels of risk. However, the levels of risk within each strategy are effected by several controllable factors. Any real estate venture can have it's risk affected by actions taken in the purchase or sale of the property, or elements contained within the legalities of the transfer of property.
photo by Breno Assis
Think about the risk you are willing and/or able to take. When you begin looking for your investment property. Be sure you express your willingness/aversion to risk to your broker. In R.E.I. your profit is made when you purchase the property. Ask for recommendations or find a good inspector. Your broker can effect this while taking care of any other stipulations involved throughout the process. As the buyer you will want to feel comfortable with each step of the process and make informed decisions. This action will, in itself, mitigate your risk.
Whether this is your first investment property or you are a seasoned investor, you will find that each property is different and each deal has it's own pros and cons. Be sure to go into all your transactions with eyes wide open. You are the "principal", and as such should be the last voice along with the transactions other party/principal. Everything else is paper and process.
If you have any other questions about real estate investment goals, or any other real estate related questions please email email@example.com or log in and leave a comment.
The information presented here is the opinion, views and writings of Troy Larson. They do not represent the opinion, views or writings of any other person, entity or company.