Ask seasoned real estate investors about the keys to success, and chances are you will hear about planning, thoughtfulness, and real estate investment goals. It may be tempting to follow your impulse and grab the first attractive deal that comes along, but it makes more sense to determine if that property fits your long-term plan. Successful investors are honest about how much risk they are willing to take, develop a strategic action plan, and set timeframes to achieve their goals.
A lot of goal setting has to do with how much risk you are willing to take. Say that you have the opportunity to invest in a project that has the potential to yield up to 30 percent return a year. A real estate investment with the potential for such high returns is likely to carry a great deal of risk, so you may want to pass. On the other hand, if you have a portfolio of high-quality properties and you have a steady cash flow, you might want to add a higher-risk project into the mix. When you set your real estate investment goals, figure out what your ideal portfolio will look like, now and in the future. You may be willing to pay more for exceptional Core properties, or you might seek higher returns with properties that require improvements.
Think about where you would like your real estate investment portfolio to be in the next quarter, in six months, in a year, and in several years from now. Be very specific about what you wish to achieve for each time period. Say your goal is to have a steady cash flow of $5000 per month from your investment portfolio in a year’s time. Then figure out what you need to do to get to that point. When you become comfortable with goal setting you can set up realistic short-term and long-term goals. If you feel that the time period you allotted is too short to achieve your goals, you can always make adjustments. On the other hand, you may be surprised by achieving your goals more quickly than you thought possible.
Writing down your long and short-term goals is just the beginning. Now you have to devise a strategic plan to reach your targets. Find key people who can help you attain your goals, make a list of financial and other resources you will need, and decide how you will get the help you need. To be successful, educate yourself about important concepts in real estate investing and stay current with market trends that affect real estate. Then assemble a team of experts including real estate agents, mortgage brokers, appraisers, and attorneys who are familiar with the local real estate market. Set your schedule so you know what you need to accomplish every day.
Review your goals monthly, weekly, or even daily to remain on track and achieve success. If you find that you are not hitting your targeted goals within your predetermined timeframe, find out why and fix the problem. Was financing an issue, or did you suffer a loss in a risky deal? When you pinpoint the problem, you can take steps to find solutions for future investments. It may be that there is no problem at all and your expectations were simply too ambitious for your time period. Due to an economic downturn or an unfavorable real estate market, what seemed reasonable to achieve in six months may now take over a year. The important thing is to measure your progress against your goals and find success, even if it takes a little longer than you anticipated.
When you set your real estate investment goals, make sure to write down specific targets and determine how you will measure your success. Expect to extend your time period if necessary. If you are not making the progress you hoped to achieve, change your strategic plan. If an investment did not turn out to be as good as you thought it would be, analyze what went wrong and think about how you will approach the next investment opportunity.
Real estate is a popular investment choice because it can offer a stable asset that produces an immediate cash flow. You can leverage the capital investment to build wealth faster…
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