Thursday, October 3, 2013

Real Estate Investment Property - Something's Devouring Profits?

You can spot "alligators" of all sizes in real estate investments by their ability to "eat" away profits. How did we get "alligators" in California where the housing market was soaring? I'll tell you how. Properties that won't sell eat away at pure real estate investing profits. On the market for months and no deal yet. Monthly payments, taxes, utilities, insurance. Ouch!! What a nightmare!

Robert Kiyosaki, best known for his Rich Dad, Poor Dad series of motivational books, talked about "alligators" that just keep eating and eating away at would-be profits and he's right. But is real estate investing endangered in California? Not by a long shot. How about the rest of the country? The old "as California goes, so goes the country," right? The great thing about investing in real estate is that there is always an opportunity to be had right around the corner no matter what the doom-and-gloom sayers say.

You might ask, "Will we invest the same way we did when these same properties were selling in hours or days, not weeks and months?" The answer is "a big fat NO!"

Another question to consider, "Will we be more cautious?" A resounding "absolutely!"

The key to investing in a market with so many "alligators" is to buy right and buy smart. Buy right and you won't be so concerned about the sale. Buy right and you can move your property to another investor or just offer it well below market value to a homebuyer. Buyers are thrilled because they get a great deal, and you have plenty of wiggle room and still come out ahead. Buy smart and consider the timing. You may find that "alligators" in California, or anywhere else in the country for that matter, create many motivated sellers. Find a way to solve their most pressing problems that will also give you an advantage, and you will create a powerful and persistent stream of income.

Buy right and you control the deal instead of the deal controlling you. If you bought too high then the "alligators" will be after you. If you have made this mistake, you will know it because the tell-tale sign is that your profits are whittled away every month, and there is no end in sight. Is your property "cash-flowing" or costing you every month? Do you have a viable exit strategy, or are you fretting as the market ebbs and flows? If you answer "yes" to the latter, then you have "alligators" wherever you are.

I have had my share of nightmares in the real estate investing business, and some of them included "alligators." However, I will tell you that when you buy right and buy smart, the nightmares go away and so do the "alligators."

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