Guide to Real Estate Investing

The Circle Of Wealth

An Import ant Consideration: As investors, it is crucial for us to “begin with the end in mind.” Now, I realize that you might be starting on a shoestring and you probably have immediate needs that you want real estate to assist you in fulfilling. However, this business can be one of the best ways for you to become a millionaire or a multi-millionaire—and on some level you understand that or you wouldn’t be reading this book. So, set aside your fear and discouragement from yesterday and ask yourself, “If I could retire in ten years and own and control 350 apartments in a good neighborhood that produced $25,000 a month in positive cash flow, would I feel safe and secure about my financial future and my golden years?” I believe that most of you would answer this question with a resounding, “Yes!” So, let’s begin your investing business with that level of commitment to your future. The Circle of Wealth can help you achieve those goals. Consider it carefully and ask yourself what it could mean to your current lifestyle (and checkbook balance) if you had 7-10 streams of income and could generate both short and long term cash flow. Then, commit to your future, to your accumulation of knowledge, and to having a mentor to guide you along the way.

An Introduction To Some Key Areas of Real Estate Investment 

Before we delve deeper into these subjects, let’s take a moment to discuss some of the key property and investment types in overview form to familiarize you with some of your options and prepare you for what you are about to learn from this material.

As professional investors, we weigh each deal against the ideal and then consider the benefits of that type of deal versus another opportunity. We do not always hit each one of these characteristics—particularly in the beginning of our investment careers—but we

always evaluate and make informed choices.

When considering a distressed property, we are looking for the following advantages:

1.      There is often less competition for them since the average individual wants properties in good condition.

2.      Most market areas offer numerous distressed properties to choose from.

3.    You can often purchase distressed properties under flexible, easy terms and for prices substantially below market value, making for a nice profit margin on a resale or good cash flow on a rental.

4.      You have the ability to instantly increase your property’s value through minor improvements and rehab work (forced appreciation).

Making The Right Income Stream Choices

Distressed Properties Vs. Distressed Or Motivated Sellers

There is an old maxim when it comes to real estate investing: “There are only two types of deals out there—either distressed properties or distressed sellers.” Regardless of your investment strategy or targeted property type, you will find that some properties provide more ideal investment opportunities than others. When we refer to a property as

“ideal,” we do so for a reason. The word is also an acronym for the following:

I           = Income (Produces Cash Flow)

D         =Depreciable (Offers Tax Advantages)

E         =Equity (Equity Build-up Increase Net Worth)

A         =Appreciation (Increases in Value)

L          =Leverage (Increases Return on Investment)

Guide to real estate investing

The Circle Of Wealth

Some things to think about with distressed properties include:

1.    Most real estate markets have a sizable number of investors looking for these types of properties, so your marketing efforts need to be active, well planned, and effective to find good deals. It would be wise to investigate different marketing strategies that have worked well for other real estate investors, and to find others in the business that are willing to teach you where to look for opportunities and provide tips on how to bring opportunities to you.

2.    To avoid costly mistakes, you’ll need to know how to effectively evaluate the property and its neighborhood.

3.    Thorough inspections and repair estimates should be performed prior to a purchase.

4.    I f the property is in a lower income and/or older neighborhood, the comparable sales in that area will not go over a certain amount of money, no matter how much improvement is made. Repairs are often costly—so in order to maximize profitability in the older, lower income areas, it is typically safer to combine a distressed property with a distressed seller and maximize the profit potential on each aspect.

5.    You must know what put the seller in the situation they are currently in and figure out the best way to help them get out of it. In order to understand their problem and solve it, you will need to develop good listening and negotiating skills.

6.    Some distressed sellers present compelling reasons why they want to stay in their properties and the tendency is to want to accommodate this. If their challenge is for financial reasons, this can be risky. It is important to keep your emotions out of it.