While it’s a great idea to invest in real estate as a business venture, you’re sure to have a more successful investment if you know which rules to follow. Here at Platinum Real Estate Professionals, we want to do everything we can to help you maximize your new business venture. Here’s a rundown of several rules to keep in mind while navigating the world of real estate.
Create Goals for Your Investment
Before you make your first investment, create a specific business goal. That way, you invest and make business moves with intention rather than move whichever way the trend blows. Examples of goals include achieving a specific rate of return, owning a specific property type and acquiring a specific property type within a certain time frame. Design your goals around your values rather than the most current trends.
Never stop learning as much as you can about the general real estate industry and the industry in your geographic location. Solid knowledge helps you invest with intelligence rather than desperation. Proper knowledge also helps prevent you from falling prey to poor investment advice. Make it your mission to keep your pulse on the latest happenings in the industry so that you stay ahead of the crowd and don’t have to play catch-up.
Do Not Guess
Another reason to make it your mission to learn is so you can make business moves with confidence rather than shaky speculation. Guessing may lead you to chase after a trend that’s already faded. If the evidence isn’t in the numbers, it’s not worth the risk.
Do Not Stay Faithful to a Single Market
Broaden your geographic horizons when investing in the real estate market. Just because your local market doesn’t have good investments right now doesn’t mean the market a few neighborhoods or states over doesn’t have viable options. Confining yourself to only investing in your immediate area could cost you more than you realize. You do not have to stick to only making business moves in your current location.
Invest for Cash Flow
Whenever you purchase an investment property, do so when you have a positive cash flow. The cash-on-cash return you enjoy depends on your investment property’s pre-tax cash flow. It is essential that you tend to your cash flow all throughout your investing career, so you always have a way to cover debt service and overhead costs.
Diversify Your Investments
Just like with the stock market, diversify your real estate investments. That said, concentrate on investing in a single market until you have anywhere between three and five investment properties before shifting to another market. When you shift focus, invest in properties in a different market in a different state. When you add some diversity to your investments, you access different economic hubs, allowing you to mitigate your overall risk. That way, if the market takes a dip in one economic hub, you have investments in other hubs to pick up the slack.
Would you like even more real estate investment rules? If so, contact a Platinum Real Estate Professionals representative today.