Real estate investing has been made very complicated. People have done this to sell information products. I am not knocking information products. They have helped me along the way. Never has any one product held the path to wealth. Really and truly, real estate investing is a game; some people play the game better than others. The key to success is actually playing the game. If you do not have a team on the field. You will never get a chance to score.
Here is the whole game in a nutshell. Buy Low, sell high, and spend less money that you make! There you have it now go forth in the world and get rich. Remember your humble benefactor in the end. Investing techniques can be quite complicated. The basic concept is real simple. Every deal should pass the test. I thing you should grasp the basic concepts of investing and trust the nuances to skilled educated people if possible. The right attorney, CPA, Appraiser and/or Real Estate Agent are worth their weight in gold. Problem is most people go to the expert looking for them to confirm what they already think. I have had to go back to the advisors with the "I know ,you were right, I was wrong ,now get me out of this mess". Humble will be often served to you learn to listen to the right people.
Here is a word people seldom use in real estate. Intrinsic.
Intrinsic describes a characteristic or property of some thing or action which is essential and specific to that thing or action, and which is wholly independent of any other object, action or consequence. A characteristic which is not essential or inherent is extrinsic.
to apply this into RE
you should buy cash flowing properties, even if thats not the exit, what if the exit goes away?
why would you buy a property for 280,000 that rents for 1200 a month,
I seen hundreds do this, they thought, due to the misleading of the service providers, that the real estate market was an endless gravy train
so in the end you have negitive cash flow
why would you take the chance of buying that?
See if your deal fits into that word. At the height of the Real Estate Mania in Florida. North Cape Coral Houses were selling for 280,000.00. These same houses rented for 1200.00 a month. Not a very good investment. These prices were driven by speculation, pure and simple. Speculators work of the greater fool theory. You buy something assuming the greater fool will show up and write you a check for your basis plus a nice profit. It happens, that happened a lot in 2004 thru 2006 in American Real Estate. The key is not to be the last speculator. He is the one holding the bag. Not a fun place to be.
An example. I bought a house from a friend. It was rented to a non-profit company. The rent was 1650 a month. The payment was about 800 a month. Pretty good rental! One night, one of the tenants fell asleep with a cigarette in hand. The house caught fire and burnt down. No one was hurt. With the way the Fl market is and was. The replacement to build was quite high. I had the property insured to 152,000. I owed 96,000. So after the positive cash flow of 12 months. I got a check for 56,000 thousand dollars. By having a chip I the game I was in a position for something to happen.
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