Rules to Live by When Investing in Real Estate

Real estate investment isn’t for everyone, but for many, it can be a successful and profitable adventure. As many seasoned investors can tell you, there are certain guidelines that should be followed to increase your chances for success. Here are the 7 rules every property investor should live by to make the most of their real estate investments:

1. 1. Do your homework on EVERY property. Each piece of real estate is different and should be approached as the unique property it is. For each investment, spend some time researching the property and the surrounding area, including the local housing market, before you close the deal.
2. 2. Invest for the long term. When investing, keep the long term potential in mind. Don’t invest for short term gains, chasing after appreciation that may never materialize. Instead, when you choose investment properties, work toward long term goals that will generate profits over the course of the investment.
3. 3. Set goals for yourself. Before investing, ask yourself what your reasons for doing so are. Are you investing for retirement? Or are you investing to generate additional monthly income to cover expenses now? Whatever your reasons, set goals; this could be based on obtaining a certain number of properties or generating a certain amount of cash flow each month. Either way, you’re much more likely to achieve what you want with clear goals to work toward.
4. 4. Remember that cash flow is king. Investments come down to one very important thing: how much profit you’re making each month. Positive cash flow equates to investment success, and the greater the cash flow is, the better off you’ll be. If your cash-on-cash return isn’t what it should be, then you need to make some changes to get it there.
5. 5. Explore other markets. There are hundreds of housing markets in the country, with some that perform better than others. Don’t limit yourself to the market you live in, or the market that you’ve invested in previously. Check out other areas to see what’s going on there – you may find investment opportunities that are even better.
6. 6. Use a property management company. For a fee, property management companies will handle virtually every aspect of your investment property. Securing tenants, collecting rent, and handling maintenance and repairs are just a few of the things these companies take care of, and it’s well worth the cost. The benefits of using a management company – not to mention the time savings and reduced stress – far outweigh the costs of using one.
7. 7. Stay involved. While property management companies allow investors to take a more hands-off approach, it’s important that investors stay involved with the goings-on of their property. Stay on top of things, and take an active interest in your property to be sure it is performing as well as it can.