Smart Investors Respect Real Estate Investment Risk And Navigate Accordingly
While there is always some risk involved in real estate investment, smart investors make well informed, calculated investments. By doing so, they mitigate risk, ultimately filling their investment portfolio with sound purchases, regardless of which real estate investment vehicle they choose.
If used with prudence and consideration, real estate leverage can be an extremely effective strategy to increase ROI. However, risky behavior such as counting on levels of appreciation to remain the same as they have in the past, assuming high mortgage payments in the interest of a low down payment, failure to correctly asses the value of the property with respect to current, and forecasted, market trends, and failure to respect the need for, as well as maintain, cash flow can leave you standing on very shaky ground that could possibly open up like the grand canyon and swallow your investment business whole.
Educate yourself about your investment.
When you carefully evaluate costs of rehabbing a fixer upper, in addition to considering the location, you will have much better control with regard to risk management. Failure to make a thorough assessment can leave you with some expensive and possibly debilitating surprises.
Don’t blindly invest in every book tape or real estate investment-training seminar.
Do handle your homework and make sure you learn from a reputable source that has an excellent track record which exhibits real estate investment success. There are many get rich quick real estate gurus out there who will try to convince you that there is a golden arrow that shoots straight toward easy over night success, regardless of experience, credit, cash flow or knowledge base. The reality is that hard work, diligence, and perseverance are just as important; possibly even more so than education and training. Remember that get rich quick schemes do not exist- no strategy, magic formula, or system can replace dedication, persistence, organization and work ethic.
Have a great team in place.
The truth is that you cannot possibly handle every single task there is to handle in your real estate investment business. You will need marketing, legal, accounting, assessment and more. Make sure you have the best people on your team that you can possibly afford.
Have a plan in place.
I’ve said it time and time again; if you do not know where you are going, you’ll have a hard time getting there. Start with the end in mind and have not only a good operating strategy, but also an exit strategy. Assume you will have success, but always plan for the unforeseen. Finally, don’t try to dabble in every type of real estate investment right out the gate. Choose a vehicle that feels attractive to you and learn everything you can about that type of real estate investing. When you take things slowly and allow yourself to learn and gain experience, you will be able to grow your real estate investment business with success in any direction you choose.
Be smart and quick, yet cautious, about the investments you make; you will minimize risk and your real estate investment business will continue to grow and thrive for years to come.
Here at REWW, we provide Experienced Real Estate Coaches who can provide further advice to help reduce risk in your real estate investment portfolio. Get with one TODAY! Click Here for more information.