Real Estate Investing

by Team IWP! on 07. Sep, 2010 in News

Real estate investing is the cornerstone of any financially solid investment plan. There is much truth in the saying that all great fortunes are made in real estate investing or once it is acquired it is put into real estate investing. This is something that you and I must pay close attention to. We may not have a fortune, but we do have what we have earned and it is very important to us and our future. Therefore, maybe we should consider investing in the world of real estate investment.

The Goal of Real Estate Investing

As with any undertaking, one should have a goal in mind. You should not be out here running the most important financial race of your life and not be striving for something. This goal can take many different forms over a lifetime and be very different from when it started or when compared to that of a neighbor or friend. Your real estate investing goals are one with your financial goals and should be see this way. And in that are incredibly unique to each person. And so they should be.

There are different types of investment goals, so let’s cover a few of them here now.

1) Cash flow investing

Cash flow investing is one of the most desired forms of real estate investing. The reason this is true is because people love the idea and concept of having more money come in than going out. This is the basis of cash flow investing. Many that are interested in this form of purchasing real estate and having this goal in mind will want to check out our article on multi-unit cash flow to get an idea of how to build an organization that will sustain this type of living. It is something that you will want to add to your list of reading to get the insights necessary to take your real estate investment career to the next level.

2) Asset generation

Asset generation is about building up the number of assets that you own. The idea is that with these assets come power. The power to be able to refinance these assets and get your hands on cash based on them as collateral. One of the major goals of asset generation is to get as many properties paid off as possible. This may mean actually foregoing immediate cash flow in favor of paying down and off debt. Therefore, 15 year mortgages are popular amongst asset generating investors.

3) Flipping

Flipping properties has become a very popular investment technique thanks to the television and the run up of property values over the last ten years. This is the process in which under valued properties that might have low to significant damage to them are renovated and put back on the market for sale. The idea is to buy low, fix up the property, then sell at retail.

This can be an exciting form of investing, but you have to remember that it is very cash flow poor. You are only making money when the properties are sold and you actually are cashing the checks. The months and weeks between purchase, rehab, and sell are slim months in terms of cash flow coming into your account. Just keep this in mind that you must build up your reserves if you are to be successful with this strategy of real estate investing.

4) Passive investing

Passive investing is part of the dream of every real estate investor. This type of investing doesn’t require you to do much outside of taking risk. Realize there is no money to be made without risk and the passive investor embraces this type of risk, one that will return money. The route to becoming a passive investor can be different for everyone, but the end result is that you have a lot of money to lend to the market place. Because passive investing means that you are lending your money directly to investors, to the secondary market, or you are going in on a project with a group or a REIT that will return a monthly residual income.

These forms of investing can be very exciting to any investor looking to breaking into the market or to the season professional looking to take their business to the next level. No matter where you are in your process of real estate development, these above goals are something that you will want to keep in mind over your real estate investing career.

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