My daughters both play soccer on traveling teams. They are solid players. Neither one is Ronaldinho, Renaldo or Messi, but they both are integral parts of their team’s successes – and disappointments. A key component to their respective games is the training they receive from their coaches. When I’m fortunate enough to have the time to see them train, it is quite obvious that a majority of the time their coaches focus on the basics: speed and endurance, foot skills, decision-making, etc. The same holds true if you are to be successful in your real estate investing endeavors.
Here are some basics to consider before committing your hard-earned money:
Home or Wealth Generator.
Real estate, for the most part, is purchased primarily for two reasons: 1) you buy a home to live in it. That real estate, historically speaking, is the very best long-term investment you can make. Remember, you bought that real estate to live in it. The bonus is that homeownership is also a great long-term investment. Market fluctuations and ‘up and down’ cycles sometimes lure investors into forgetting that they bought the home to live in it. 2) you buy property and/or land as an investment. That real estate, whether it is a short- or long-term investment, is very different than aforementioned item #1. Your goal here is to generate increased wealth. Until you answer this simple question with absolute clarity, “am I buying this real estate as a home or as an investment,” your expectations (see below) will be tainted.
Expectations can run wild. Stories from friends, experts, peers and others about becoming millionaires overnight still exist, even in today’s market conditions. Reign in those expectations. In fact, do yourself a favor and forget them as soon as you learn about them. That expectation is unrealistic. Successful real estate investing is hard work, dedication and typically a group effort.
Location, Location, Location.
“Prime Time Investing” is a pioneering tome written by Michael Anderson, Founder of RealSource. In it, he identifies and expands on the well-known real estate mantra, “location, location, location.” As you know, in real estate investing, buying low and selling high is a matter of knowing where and when, and that requires research. There are what Anderson calls “where and when” circumstances in the 360+ domestic U.S. markets and getting in, at the right time, can stack the “economic deck” in your favor.
The process of investing well starts with identifying whether you’re purchasing real estate as a home or for investing purposes only, determining expectations based on the reality of the market, and knowing where and when to get into a market, and when to exit.