Though real estate investments have ups and downs, they can prove successful when you take the right action and get off the fence from being a spectator to a real estate investor.
As Wayne Gretzky said…”You miss 100% of the shots you don’t take”.
We cannot understate how important it is that as an investor you protect your investment. Whether you are investing in a piece of property with commercial possibilities or a cottage to live in during the weekends, make sure to take the necessary steps to secure your interests in whatever way(s) possible. Feel free to connect with us for a no-obligation chat to help you set the right goals and get on the fast track of profitable real estate investments.
1. Determine your financial plans
To be successful as a real estate investor, you must understand how you plan to fund your investments. Do you bring enough money to the closing table? Have you considered other financing alternatives for investment properties such as hard money or joint ventures?
Finally, consider the costs of repairs, operating expenses and property management fees on top of the mortgage in your financial plan when administering your real estate portfolio so that it will ultimately help you achieve long-term financial objectives.
Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world. – Franklin D. Roosevelt
2. Use Real Estate analytics and investment tools
Successfully investing in real estate requires calculating data, metrics, and other key factors such as rental income or cash flow. Having the correct mix of numbers on your side doesn’t hurt when you’re in the midst of picking out properties either. It’s just another way to customize your portfolio in a uniquely efficient manner!
If you are determined to have a successful real estate investment portfolio, there are key figures that you should be familiar with. Like rental income, cash flow and the capitalization rate – these crucial figures can help one analyze any future business deals successfully with at least an estimation regarding how much profit will be made after purchasing any property to renovate for sale. As for calculating the success of your real estate investment portfolio, it is vital to examine the amount of cash-on-cash return from your investments in order to make more informed decisions in the future!
3. Build a strategic real estate investment plan that aligns to your financial plan
The best investment on Earth is earth. – Louis Glickman
Real estate investors use a variety of techniques to create their own portfolios of properties. Each portfolio may have different asset allocation models and methods which help investors determine how they will allocate assets to meet their objectives. Although building a plan may seem like too much work and look difficult, an individual must decide what asset allocation model works best for them in terms of meeting strategic goals while staying within set risk parameters. It also helps you when you want to bring partners and create joint ventures. A good plan assures potential partners that you are strategic and serious about real estate investments
4. Make diversifying investments
Placing all of your eggs in one basket, like any other investment, comes with a risk. The real estate market fluctuates, and if all of your property investments are of the same type, and the same area you’ll be stuck if the market falls. I know of a real estate agent who has 25 units in one condominium – you can imagine his state each year when condominium fees go up.
A diversified investment portfolio that has a good track record of returns is essential to success. If you want your investments to be stable and secure, don’t let your hard-earned money sit in one place — spread it around so that if one investment goes bad, you won’t lose everything. You should ideally have a number of different locations, asset classes, or even alternative investments like REITs so that even if the market fails in one area, you can rest assured that your portfolio is still sound overall.
The End-note
For those looking to establish a real estate portfolio, there are a lot of factors to consider. The key question to consider is – what is the end goal? Are you putting together an investment portfolio for profit or do you want affordable housing for your family or are you looking to fund your kids education or retire comfortably?
Owning a home is a keystone of wealth… both financial affluence and emotional security. – Suze Orman
A good understanding of a real estate portfolio is essential for managing and growing long-term wealth and your personal budget and obtaining financing for future projects. We can help you create a customized plan based on your goals to help you get started or continue investing in more profitable, positive cash flow properties that can drastically improve your overall financial situation.