I spent some time in Colorado in the early 2000's and was pretty active in the real estate market at the time. One of the comments that we regularly heard was that "there is no more land being manufactured". Being land locked by the mountains, real estate was at a premium and investing was considered to be a sound long term investment.
In today's environment, new investors are coming into the picture every day and are full of questions and ideas, but at times are also confused about the real value of real estate. They need help developing the long term view of buying discount investment properties.
Many of the changes in the views are being developed because of the economy and the mainstream medias constant knocking off the real estate market. What many in the media fail to convey though is that real estate and especially investing in real estate tend to vary from market to market. Real estate investing , in truth, can be very lucrative and create great wealth over the long term regardless of market or economic condition.
To help out, I have put together 4 basic principles to follow when investing in real estate. I happen to be very knowledgable about the Memphis market and my company in general so I tend to give advice that works in Memphis but can be followed anywhere.
- Stick to the basics - There are a ton of real estate investors today and some who consider themselves gurus or experts that tell you creativity is the key to success. I will tell you they are flat our wrong. Using sound fundamentals to determine quality real estate investments will win out over creativity every day. Keep it simple and stick to the basics.
- Deal with reliable partners - Unfortunately, there are many companies around the country who will gladly sell you properties regardless of the return or prospects for success. Investors are simply a means for them to make money by selling property. Get to know who you deal with; make sure they are THE local expert and invest wisely.
- Use 'Common Sense' strategies - Investors should never invest in appreciation. Appreciation is a 'wish' and a strategy we call 'hope'. Investors today should invest in properties producing positive monthly cash flow in cities with attractive rental rates, job rates, prospects for growth and economic rebound. Appreciation will follow.
- Plan for the future - Real wealth is built using real estate as a vehicle for the future. One property will not build wealth but may bring a great return in the future. 10 Properties on the other hand can absolutely build wealth and enable you to continue to invest in other properties as the future unfolds. Always plan on how you are going to build toward your future.
Real estate investing can be a very smart use of an investors valuable resources, but must always be approached with extreme caution. Making sure you know who your partners are and following the basics can lead to great success and a very stable and reliable future!
