Managing Real Estate Risks

Fear is a risk that is borne out of insufficient knowledge. One should not feel naïve or uninformed. At the end of the day, if one does not do this to earn one’s living on a daily basis one will always feel out of place. Funnily, most people are not aware of what influences changes in stocks. Consequently, most people go on to buy mutual funds because they believe the fund manager has a better idea on stocks than they do. As such, the fund manager gets their pay even if stocks depreciate and people buy even more as they save for retirement. People do buy mutual funds as well and although they have suffered, a downward trend this year there is nothing people can do about it. As the worst mortgage / real estate crisis of this era unfolds, people are making profits by investing in real estate. People plan to hang onto their money though risk management is all about diversification.

Robert who authored the book ‘Rich Dad Poor Dad’ and ‘Why We Want You To Be Rich’, written along with Donald Trump observed and rightly so, that there is a less chance of risks when people do not have so much control over things. As pertinent to people’s investments in real estate, people control all factors such that on buying mutual funds people do have to instruct the fund manager on what stocks he or she should buy or sell.

When one is not well versed in a certain industry, it is preferable to get the partnership of an experienced expert. One depends on an accountant for advice on tax, a doctor for advice on medical issues as well as an attorney on for advice on issues legal. The kind of information one has as regards their industry is little since they have neither studied it nor do they practice it on a daily basis. M&M Properties operates like a doctor on real estate. They are paid to analyze properties, the markets and the techniques therein and the solutions thereto where we rely on self-education. We carry out the solution, an equivalent of the prescription and administration of the treatment such as the property rehab in addition to contract negotiations among others to enhance the profitability of property.

Nowadays, passive revenue has become a buzzword; people have faith in it for good reasons. People are always talking about multilevel marketing, MLM. Recently, I made a suggestion to a fellow who tried to sell me via an MLM program that people are paid as soon as they click on a certain website or internet ads. He said that if one were to recruit each person into the program on a cases by case basis then one is likely to die of old age before they manage to build their network of people. At least the ones from whom one is paid off in the MLM arrangement. The person however, was adamant and proceeded to educate me based on the number’s workings and that they could end up reaching massive figures as one goes on. They concluded that it is the best way he knew how and that for them it was the way into the future.

Different people have various ways of making money such as multilevel marketing. It therefore all depends on how one believes as well as what one chooses to set their mind upon.

I will tell you these facts: All people require a home, the markets from where people buy properties or to where people well enjoy a higher demand as opposed to supply hence ruling out the risk of the house remaining vacant or attracting low rent. Second, a company could easily be declared bankrupt if its stock happens to depreciate instantly but a house will never be worthless even if the real estate market drops. Third, the real estate market is at its lowest level, if anything it has been to the bottom and is now picking up in various operation areas.

Where the level of risk is considerably reduced: Low chances of vacancy; which will imply one having to carry the cost of property from one’s own costs. Second, there are no chances of further depreciation. Third, there is little risk of the property depreciating because one had it repaired; such costs of repairs are usually down. Finally, little chances of enduring higher costs as the income accruing from the rent is higher than the property’s total cost.

However, one needs to consider this. In simple and general terms, if one were to purchase a property using a little of their own money and when all the money in lieu of expenses such as repairs, gas, vacancy, electric and mortgage is deducted, people make a profit of one million dollars every month. They are guaranteed their full investment after a few months and their monthly income or cash flow will have been boosted by about $800 to $1000 until the time they will let the property with its value, always appreciating.

If one is not in a position to raise the cash currently, people could tell one of investors from whom one could tap their credit line to use as one’s down payment. One should identify that people do not advise the abuse of credit in purchasing property that will quickly depreciate and leave one in debt or in a credit mess. However, from Robert Kiyosaki’s teaching people are talking about good debt; that the purchase one makes the debt appreciates and makes up the cost of the debt. It is this strategy that the rich use to get richer they control the cash.

They also ensure that they but at a low price and sell at a higher one. This something we have heard since now that the property market is on its deathbed, all of us are scared. People have no problems with that, if anything only last week, people flipped three properties to the wealthy because they like to buy when prices are low but sell high.

Look at it from this perspective, assuming one receives one’s mail while at the same time one posses, one’s Verizon bill.

QUESTION: How many folks would one need to use time recruiting via an MLM or pay per click program and how much time of work would it last one to come up with enough money (using these strategies) just to off set one’s cell phone bill? Make a comparison with some extra eight hundred to one thousand dollars coming in on monthly basis without one having to undertake any work except setting up the initial deal. The rich use that approach to get richer by not spending any time or their money. They go for investments that fetch them ‘passive’  cash, which always appreciates every day irrespective of what one is doing or where they are.

People look at it in terms of the quantity of time one puts in comparison to the level of returns one gets. People flipped three properties yet people only spent a little time over the computer to fix the deals. People did not have to use any of their money.

Risk reduction involves gaining higher levels of control. A further reduction of risk involves the presence of options. Through purchase of properties at prices below the market value or purchasing properties that attract rents whose value is higher than the costs of carrying the property. One can also opt for properties in a market that is rapidly appreciating. All these options present a risk reduction element. If the property that one purchases fulfills all of these criteria, the risks are definitely very low. If one has many advantages about the property, one also gains several points of departure. In this way one reduces the risk of having to hang onto a depreciating property. If such options of letting the property are greater, one is at a better position.

 

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