Real Estate Investment Secrets That Really Pay Off

Every profession has its secrets. It’s an unavoidable part of the way it operates. Real estate investing is no different. Those who are lucky enough to survive in it and acquire experience soon realise that there are indeed so-called secrets that basically govern the formula for successful real estate investing.

I mention this, in various forms, at most meetings or after-dinner speeches I give and invariably as soon as I have finished someone finds me and asks: “What are they? These secrets?” At that point I almost want to laugh because I know what they expect to hear: they want to know a fool-proof real estate investment recipe that will give them automated earnings the moment they blindly apply it.

We all want that one, me included, and I have a million dollars sitting pretty in the bank. With that money there you would think I can afford to choose when to work and when not to and you would be right, but it is still hard work. A recipe like this when applied would give you an instant pay off would be great to have, except, I do not have it.

The ‘secret recipe’ that I apply to this is based on a diversification of my activities as a real estate investor, based on my knowledge, understanding and analysis of the target market. I know I am beginning to sound a little corporate so let’s go and see what I mean.

1. Choose your property type and style: understand why you are going for each type of property. If you target multi-family dwellings, for instance, you need to know exactly at which point your residual income kicks in, what your running costs are and what strategies you have in place to reduce operational overheads. If you go for single-family dwellings you need to know just what type you are looking for, in which area and what type of profit margin you can operate with and still turn a profit.

2. Minimise your exposure: work creatively, through real estate investment syndicates to maximise profits and minimise your own exposure by using other people’s money to find and close deals.

3. Create your own network: put in place an automated information flow from various parts of the state or even the country designed to alert you the moment an emergent domestic real estate market breaks.

All of these seem like simple, basic steps. In a sense they are but their value is in allowing you, the real estate investor, to work constantly and without breaks no matter what state the economy is in and with a specific goal in mind.