Real Estate Investment Principles

Real Estate Investment Principles

Real estate investing can be quite lucrative, as you probably know.  It can also be risky.  Especially for the beginner investor it’s helpful to understand some basic real estate investment principles to guide you through the investment process, and help you understand the real estate investing pros and cons, as well as the real estate investing risks.

Before we look at a few important real estate investment principles, it’s always a good idea to consult with your financial planner, tax advisor, and your real estate investing mentor (it’s wise to have this person at your side).

8 Important Real Estate Investment Principles You Should Know and Practice:

  1. Get educated about real estate investing. If you haven’t done much real estate investing or are struggling in how to get started as a real estate investor, get some training. As with anything important you do with your life and your money, start by getting some reliable education before you begin. Consider LeAnn Riley’s Proven Profit Formula Coaching Program that combines online classes and weekly personal group coaching with LeAnn. You will learn the real estate investment process, real estate investing rules, and have the tools to guide you into investing in cash-flowing properties quickly. Specifically, you will know how to tell a good deal from a bad deal.
  2. Examine and understand your leverage. You must have some capital to get into real estate investing. While you don’t necessarily need a huge amount of money to get going, you do need to know how much you have access to. Your leverage includes not only money in the bank. You could have other funds–your home equity, life insurance cash value, or even your 401K. And think beyond what you yourself have available; consider possible partners or loans from family or friends. And, of course there are standard real estate loans and even hard money. Know what your credit score is, and do some research on lenders who are real estate investor friendly.
  1. Identify your investment vision. This is a real estate investment principle that is rarely covered by trainers and mentors.  Your investment vision consists not just of your financial planning and goals; you need to develop a wealthy mindset to become a savvy investor.  This step involves a serious look at your own strengths and weaknesses, your fears and risk level.  LeAnn’s Proven Profit Formula Coaching Program helps you clarify your vision and prepare you for the challenges and rewards of real estate investing.  Your vision includes such things as focus, confidence, intent to succeed, surrounding yourself with like-minded supporters, persistence, control of your emotions, and a positive mental attitude.
  2. Always know the numbers. A key real estate investing principle or rule is to learn a proven system of how to analyze the numbers before you get too far into locating properties to acquire.  You have to know how to tell a good deal from a bad deal, and you cannot determine a good deal until you have all the numbers.  Utilize a reliable cash flow spreadsheet to ensure you have taken into consideration all costs and expenses plus realistic rental revenue.  This is a critical step in a real estate investing process.  If you know how to do this, you can save yourself a ton of time and money; you don’t even have to see the property to know if the cash flow is what you need.  If the numbers work, proceed with the next step.  If they don’t, move on to another property that works.
  1. Build a team to support your real estate business. Find the experts you need on call to support you as you start and grow your portfolio.  You will need attorneys, tax advisors, Realtors, handypersons, lenders, painters, carpenters, and more.  Not all lawyers or CPAs know the ins and outs of real estate law and tax implications, so make sure the people you choose have experience in real estate investing.  Same is true for Realtors.  You will need an agent who’s dealt with investment deals and knows how to complete negotiations to get the properties that will work.
  2. Determine the best real estate investing strategy for you. This is an area most beginners are more familiar with.  You need to determine which strategy fits your skills and meets your goals.  Real estate strategies include buy-and-hold, fix and flip, wholesaling, multi-family rentals, and more.  If you’re handy, have a team of workers and great organization skills, a fix and flip property can quickly produce a chunk of money you can then use to invest in a another property. If you have excellent people skills to deal with tenants, and can put consistent systems in place to collect rent and communicate with renters, a buy and hold strategy might be best for you.  If you work with LeAnn Riley and her Proven Profit Formula Coaching Program, you will soon discover the right strategy or strategies for you and your family. Combining strategies is a more sophisticated process yet can yield a greater return on investment (ROI).
  1. Understand how to optimize your property. Once you’ve acquired a “good deal”, carefully examine your income and expenses on your spreadsheet to identify possible ways to generate additional income.  Making a few improvements on the unit(s) may justify a rent increase–maybe just paint and new flooring.  Also look closely at what you’re spending for utilities, insurance, maintenance and repairs.  Often there are legitimate areas to cut costs while not losing needed services.
  2. Think big but start small. It’s easy to get ahead of yourself as you dream about “passive income” and retiring early.  But looking at all the real estate investing pros and cons, be sure to stay aware of the challenges and risks, and stick to a plan to gradually build your portfolio.  Depending on your motivation and skills, you may be able to acquire several properties a year.  It’s safe to say that sound investment training and a seasoned mentor will help you grow more quickly.  Take a look again at LeAnn’s Proven Profit Formula Coaching Program….she has helped numerous investors to grow quickly by guiding them through each deal and ensuring the numbers work for positive cash flow on each deal.

“I’m 29 years old, bought an investment condo in Boston, but I wasn’t sure where to turn next or how to grow my portfolio. I finally found the answers and the confidence to be a wise real estate investor. Thanks to LeAnn’s Proven Profit Formula program and her coaching, I have the tools now and criteria to make a decision easily as to which investments are smart. The cash flow analysis and team building exercises are my favorites.  Not only did I learn investing but I learned how to grow my business.”

– IMMEI

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