Residentail Investing First 3 Key Prinicipals for Success Blog 1

Over a decade ago when I started down the real estate investing path, I made the decision that I would dedicate the first 6 months to not investing, but learning, building a business plan and understanding the market. Kind of like learning how to surf - in order to be any good and not drown you need to learn the tides, wave patterns, breaks, bottom structure, weather influences and so on.

So I started by reading every book and article I could get my hands, joining invest clubs, web searches, talking to established pros, attending auctions and writing business plans.

Approaching investing as a business and taking time to learn and observe is absolutely the correct thing to do - knowledge and preparation is for life . However, after all the dust settled from the first few months of watching the waves I started to realize, this isn't rocket science. It begins with a few core principals, of which the first is the old adage "Buy it Right". 

"Buy it Right" is number one regardless of whether your flipping cars, houses, trinkets on eBay, just anything. It is common sense to every investor, but I frequently see investors violate this basic principle and toss it out the window in the heat of negotiation or desperation to get the next deal . Why does this happen? emotion. 

So Principle #2 is...you guessed it, "No emotion". Real Estate investing is a numbers game. Emotion in real estate belongs to the agents and retail clients who get pumped up on finding their next "dream home" and your flip.

Principle #3 is "How much can I loose?". If your not careful you can loose a lot not unlike  a stock investors unlimited exposure (risk) when shorting stocks. You must ask yourself when analyzing a property, "how deep is the downside" ?.  I once knew of homes being sold for $1, however because of back taxes, zoning changes, high crime neighborhood, degrading structures, municipal requirements, broken infrastructure and all else it would have meant any buyer would have stepped in the abyss of the money pit. 

Principle #4 is have multiple exits. In the amazing business of real estate investing, you have multiple options to exit your deal. You can write assignable contracts, wholesale, fix/flip, rent, lease to own, quit claim, occupy the property.

More next time...