Wednesday, June 13, 2007

Back into the investment and marketing game

I have decided to shift my focus in real estate a bit and spend more time talking about the great opportunities available in the investment community. As a result, I am revamping the website as well as and updating the IP Ware real estate investment analysis software.

The truth is that the real estate “land rush” of the late 90’s is over. As a result, the buy on speculation approach is no longer an acceptable way to invest in real estate. So instead, it is back to the fundamentals; which are simply stated as follows:

1) Make sure that your investment returns a positive cash flow. I have attended a lot of seminars over the past few years that preach buying income property with financing that returns a negative monthly cash flow. Usually the seminars teach that monthly net revenue of negative $200 or less is acceptable and that the investor should focus on appreciation. My personal position is that if you have a negative cash on cash return you should not do the deal.

2) Factor in vacancy rates. I cannot tell you how many associates, and even family members, that only focus on gross rents. As a real estate investor, you need to accurately estimate your costs.

3) Use other people’s money. Arrange your financing so that the bank, your backers, or partners with the deepest pockets supply the bulk of the funds. If you structure the deal properly, you and they will get the desired return on investment, and you will have the cash to do other things.

TAGS: real estate investment, seminar, basics of real estate investing, vacancy rates, vacancy factor, negative cash flow, cash on cash return, other peoples money

1 comment:

Freddie Aguilar said...

I found your website that captures my interest while searching the internet for particular keywords related to real estates. This is a very informative blog of yours. Keep up the good work. You may also check Real Estate Investments and TIC Investments if it interest you for additional information's. Thank You...