Before you jump into a so-called good deal, review how well your investing will align with your personal abilities, resources, likes, and dislikes. Answer these questions:
Time and money. How many hours per week or per month are you willing to invest? Realistically, what does your financial profile look like (credit, cash, earnings, borrowing power)?
Trade skills. What types of handyman talents do you possess? Do you enjoy this type of work? Are you willing to learn how to work with contractors and manage construction rehab and renovation projects?
Creativity and design. Do you enjoy searching out new ideas? Are you willing to learn and adapt the ideas of others? Would you like looking at properties, attending trade shows, and browsing through magazines and journals to learn more about property management, creative improvements, and related topics?
Partners. Do you prefer to play as a one-man band, or would you like to join with others to share financing, work, responsibilities, and decision making?
Tenants. What types of tenants would you like to work with?
Real estate agents. Do you want to search and sell on your own, or will you employ real estate agents?
Numbers. Can you learn to work with income statements, cash flows, rate of return calculations, cost estimates, budgets, and tight rehab and renovation schedules?
Personal achievement. What types of real estate would give you the greatest sense of personal achievement and pride of accomplishment and ownership?
No matter how you answer each of the above questions, you can develop a strategy that more or less fits your desired profile. The key is to anticipate and prepare, to harbor and hold expectations that match reality. Many investors try to do it all. They burn out long before they realize their potential. Others buy with little or nothing down and then find they lack cash or credit to navigate through stormy weather. Fortunately, such mismatches of time, talent, and money often produce distressed owners who sell at bargain prices-just to get rid of their difficulties.
The nothing-down real estate promoters have pulled too many starry-eyed investor wannabes farther down the path to financial ruin with their mantra of “no cash, no credit, no problem. " Although you can buy real estate without cash or credit, that fact begs the question, “If that is your situation, why do you lack cash or credit?" To succeed in real estate (as with all other types of investing), exercise financial discipline and responsibility. “No cash, no credit" certainly poses a problem when an impecunious position results from excessive spending and borrowing.
Step-by-Step, Affordable Training Videos on How to Build or maintain a Powerful commercial property Portfolio, covers land, apts, multifam, retail and more!
By: Raymond Pedersen