If you want to be financially independent, you will need to have some sort of investment income to provide for yourself. This way you will not have money coming in that you do not have to go to work for. One of the two good ways to do this is real-estate, the other being mutual funds. If you invest in real-estate and do it right, it can be a very profitable and exciting adventure, but if you do it wrong, you can get yourself in a huge mess. Here some suggestions if you are interested in beginning to do some sort of real-estate investing.
The first thing that you need to know is what not to do. Do not even consider getting a tape-set from an overnight cable program. They will teach you information about real-estate which looks very good on paper, but does not work in reality. Let’s stop a second and think. If investing in real-estate was so easy and profitable, why are they selling tape-sets on midnight cable shows instead of being real-estate investors? It doesn’t make any sense. It’s just not as easy as it might look when presented on an overnight cable show. They do not have any unique insight on real-estate investing, so stay away from these programs.
One of the many things that the over-night cable television shows and many beginning real-estate investors fall into is leveraging themselves to death. They buy homes on 100% down plans, have zero equity, and own way too many properties. These plans might work out if everything worked exactly perfect. Ideal projections and reality are almost always two different things. You never know what kind of unexpected repairs your rentals will need or if a renter does not happen to pay. Something could always happen, and it usually does. Once one or two renters quit paying, the landlord will be in foreclosure. Once one of the homes goes in foreclosure, it works in a domino like manner. Eventually all of their rentals are in foreclosure and the only option is bankruptcy.
So we know that borrowing too much money and listening to overnight cable programs do not work. So what does work? You have to move very slowly and borrow as little money as possible to be around in the real estate business for a long period of time. Money on the home is made at the buy, you need to look over dozens of homes just to buy one which is a really big bargain. You need to avoid debt as much as possible and keep cash on hand so you can survive if a renter doesn’t pay, or some other emergency does not happen.
If you want to do really well, talk to someone who is in another real-estate market that has been around for at least 20 years. Take them out to a very nice dinner and ask them a lot of questions. Bring a yellow pad and soak up their information. Their wisdom over one lunch period will do you far better than any cable program.
