R + P + M + S = $$$ ~ My Personal R.E. Formula
Dear Future Real Estate Moguls;
Thanks for reading the Cash Flow Cows Blog. It is my sincere desire to give readers tips and suggestions that can assist them in their quest for financial freedom through real estate investing.
As the majority of my acquisitions are in other states (Who can cash flow in California these days?), I'm often asked if I have a formula for choosing the next hot spot. Well, actually, I have a large map of the U.S. in my office. When it's time to invest, I close my eyes and throw a dart. Wherever it lands, it's where I go.
JUST KIDDING!
Truthfully, many people may as well do just that. They have no plan for investing, they just hear of a good tip and go with it. Or, other people invest in an area where their family lives -- Trust me, you do not want Uncle Joe collecting the rents and getting chummy with tenants! With this in mind, I'd like to share a little formula that I created, which has worked well for me.
Research + Purchase + Maintain + Sell = $$$$
The first and most important aspect of investing (whether it be investing in securities or property) is RESEARCH.
My investing guru, Mr. Warren Buffet, the most successful investor in the United States, if not perhaps the world, once told a reporter that he spends up to 10 hours per day researching... 10 HOURS, folks!
When was the last time you picked up a newspaper's real estate section? A good investor has an abundant library, stocked not only with motivational books, but also DAILY newspapers. As a reporter for the past 18 years, I can honestly say that learning how to do RESEARCH was my ticket out of poverty. The minimum wage jobs that I had in journalism were worth it because they taught me the value of reading, investigating and asking questions. RESEARCH is the key to real estate riches.
Ask yourself these questions when you look for real estate: Where are people moving to? Where are they moving from? Where are the jobs going? Where are businesses closing? What areas were voted as being the best places to live?
Next comes the PURCHASE. Some investors won't buy anything unless they get the deal of the century. Well, sometimes by waiting for that deal, you miss out on a lot of wonderful properties. Then, that "great deal" never materializes because the competition to buy under-valued realty is so fierce. Folks, don't be afraid to pay market value (heck, I've even overpaid sometimes). But guess what? If you do your RESEARCH correctly, your purchase will appreciate even if you, God forbid, had to pay a market rate.
Another strategy I follow is purchasing multiple properties. I figure that I spent so much time on the research that if I'm going to buy, why stop at one? Instead of putting 20 percent down on one property, I like to go in with 10 percent and buy two. Or, instead of buying that 48 unit complex, buy two 24-unit ones. Why? Because if you did your RESEARCH correctly, the appreciation on your purchase will be strong. Buying two allows you to sell one for a short-term profit and then you can keep the other one for long-term growth. The few times I didn't follow this rule, I kicked myself because then everything went up and I was priced out.
MAINTENANCE is the next part of this equation. Keep your property looking sharp. Spend the extra money and effort to make sure it has curb appeal and that the units look good on the inside. The better your property looks, the easier it will be to keep it fully occupied and the easier it will be to get to the next step...
SELL -- I know, I know, most real estate gurus advise to NEVER sell and just refinance when you need money out of your investments. Personally, because I'm always doing RESEARCH, I prefer to sell and move on to a new market that can give me a better cash flow. The Bible states: Seek and ye shall find. Well, I seek it and lo and behold, I find it!
I cannot stress enough how vital RESEARCH is to the success of your portfolio. Think of it as the economic vein that pumps cash into your bank account. With this in mind, I leave you so you can go pick up today's Wall Street Journal or this month's MONEY magazine.
May you be richly blessed,
Linda
advisors@CashFlowCows.com
JUST KIDDING!
Truthfully, many people may as well do just that. They have no plan for investing, they just hear of a good tip and go with it. Or, other people invest in an area where their family lives -- Trust me, you do not want Uncle Joe collecting the rents and getting chummy with tenants! With this in mind, I'd like to share a little formula that I created, which has worked well for me.
Research + Purchase + Maintain + Sell = $$$$
The first and most important aspect of investing (whether it be investing in securities or property) is RESEARCH.
My investing guru, Mr. Warren Buffet, the most successful investor in the United States, if not perhaps the world, once told a reporter that he spends up to 10 hours per day researching... 10 HOURS, folks!
When was the last time you picked up a newspaper's real estate section? A good investor has an abundant library, stocked not only with motivational books, but also DAILY newspapers. As a reporter for the past 18 years, I can honestly say that learning how to do RESEARCH was my ticket out of poverty. The minimum wage jobs that I had in journalism were worth it because they taught me the value of reading, investigating and asking questions. RESEARCH is the key to real estate riches.
Ask yourself these questions when you look for real estate: Where are people moving to? Where are they moving from? Where are the jobs going? Where are businesses closing? What areas were voted as being the best places to live?
Next comes the PURCHASE. Some investors won't buy anything unless they get the deal of the century. Well, sometimes by waiting for that deal, you miss out on a lot of wonderful properties. Then, that "great deal" never materializes because the competition to buy under-valued realty is so fierce. Folks, don't be afraid to pay market value (heck, I've even overpaid sometimes). But guess what? If you do your RESEARCH correctly, your purchase will appreciate even if you, God forbid, had to pay a market rate.
Another strategy I follow is purchasing multiple properties. I figure that I spent so much time on the research that if I'm going to buy, why stop at one? Instead of putting 20 percent down on one property, I like to go in with 10 percent and buy two. Or, instead of buying that 48 unit complex, buy two 24-unit ones. Why? Because if you did your RESEARCH correctly, the appreciation on your purchase will be strong. Buying two allows you to sell one for a short-term profit and then you can keep the other one for long-term growth. The few times I didn't follow this rule, I kicked myself because then everything went up and I was priced out.
MAINTENANCE is the next part of this equation. Keep your property looking sharp. Spend the extra money and effort to make sure it has curb appeal and that the units look good on the inside. The better your property looks, the easier it will be to keep it fully occupied and the easier it will be to get to the next step...
SELL -- I know, I know, most real estate gurus advise to NEVER sell and just refinance when you need money out of your investments. Personally, because I'm always doing RESEARCH, I prefer to sell and move on to a new market that can give me a better cash flow. The Bible states: Seek and ye shall find. Well, I seek it and lo and behold, I find it!
I cannot stress enough how vital RESEARCH is to the success of your portfolio. Think of it as the economic vein that pumps cash into your bank account. With this in mind, I leave you so you can go pick up today's Wall Street Journal or this month's MONEY magazine.
May you be richly blessed,
Linda
advisors@CashFlowCows.com
PS: If you don't have the time or the expertise to RESEARCH, the most vital aspect of investing, then let the Cash Flow Cows team do it for you! Our expertise is in locating properties in areas where an investor can not only benefit from current cash flow, but also be in a market with a potential for strong appreciation.
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We Hand-Pick Properties and Market Areas Where We INVEST PERSONALLY!
We Hand-Pick Properties and Market Areas Where We INVEST PERSONALLY!
No part of this blog may be reproduced or transmitted in any form or by any means, electronic or mechanical without prior written permission except by a member of the media who wishes to quote brief passages for inclusion in a magazine, newspaper or broadcast. The advise in this blog is solely based on personal opinion. Always seek the advise of a trusted attorney, broker, financial planner, accountant or other professional before investing in real estate.
posted by Linda Pliagas @ 1:05 AM
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