Speculate Vs Control, Choose to Control Your Success in Real Estate Investing
A crucial concept to understand is that we do not have control over the value of real estate. There are so many economic and market indicators that effect value. So what is an investor to do? Easy, instead of speculate, control your profitability and probability of success with your investments. You can make money anywhere and in any market with real estate. Some areas or market conditions make things much more difficult but you can and will always be able to control how you buy. Here are things you can do that can not only increase your success but you have control.
Buy at deep discounts off market value rather than at or close to market value – 70% LTV max meaning a property worth 100K you want to purchase for 70K max which includes repairs.
Buy a property that has strong positive cash flow – In many markets you can find properties where the rents are 1.5X or even double PITI, Payment+Tax+Insurance. $200 positive cashflow may not be enough to cover maintenance, property management, vacancy or surprises. And always make sure you have reserves to cover for these items.
Buy in a good area with strong demand from renters and/or homebuyers – Warzone properties look so great when priced so cheap. Well they are priced so cheap because there is such a huge supply and no demand. That is a recipe for disaster. Find the diamond in the rough in the areas that have strong demand from buyers and renters and do not have an oversupply of homes.
Do deals with multiple exit strategies rather than limited by one – Tremendous equity and cash flow results in the ability to flip, wholesale, sell to an investor, refinance, lease option, buy and hold, etc. Multiple exit strategies afford you the ability to make mistakes and run into surprises and still profit.
Buy because the numbers make sense thus making an informed business decision rather then buy based on emotions – Too many investors fall in love with the deal. This is a business, not the home you are going to live in. The numbers have to make sense or it is not worth the risk.
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