To become a successful real estate investor, follow the ensuing rules of success:
- Educate Yourself - without knowledge you are doomed on your investment venture. Knowledge will take you to the ladder of success as a plausible investor to a prodigious investor.
- Set Investment Goals - setting clear and specific investment goals is your road map, and course of action to becoming financially independent. You are statistically more likely to achieve goals by writing them down in a business plan and setting dates to accomplish the goal by. Specific goals can include:
- Purchasing criteria for property acquisition.
- The type and location of invest properties for acquisition.
- The quantity of properties you will have in your portfolio.
- Holding period on the properties before upgrading.
- Never Speculate - on short-term gains in property appreciation
- Control - always maintain absolute control over your investment properties. Never if possible:
- Have a partnership.
- Other investors in your business.
- Invest for Cash Flow - always buy investment property with a positive cash-flow. The higher the cash-flow, the better your investment is, since the cash-flow covers your operating expenses and debt service. The equity that you have in a property will grow over-time through appreciation and loan amortization. These two items should be considered the ‘icing on the cake.
- Leverage Your Capital - real estate is the only investment where you can borrow other people’s money (OPM) to purchase, and control income-producing property. This allows you to leverage your investment capital into more property than purchasing using ‘all cash.’ Leverage magnifies your overall rate-of-return and accelerates your wealth creation.
- Be Aware of Your Investment Market – each market is different (different city different market, different town different market), you get the idea! Choose your market carefully by analyzing all the data that you can gather.
- Diversity Across Markets - acquire no more than five properties in one market, then go on to the next. The idea behind this is diversity, which should help to eliminate risk should a market decline for any reason.
- Property Management - within your business plan, you should specify a period when you will transfer the management of your investment properties to a Professional Management Company. In doing so it will give you more time to spend with family, and investment career.