Creato da: jacobeachcommercials il 20/04/2008
jaco beach commercial sale properties
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Post n°1 pubblicato il 20 Aprile 2008 da jacobeachcommercials
Many investors do start their career by buying a rental house, then another, and maybe a duplex or small apartment building. Sooner or later they 'hit the wall.' The 'wall' is when you're bank tells you they can't give you any more single-family mortgages or that your portfolio is outside their lending parameters. This is a common scenario and a very real problem. The investor has gotten too big to deal with the residential lending folks and is a fish out of water when it comes to knowing how to approach the commercial side of the bank. Another common scenario is the investor who happens upon an income property deal, perhaps assumes an existing mortgage or negotiates seller financing. The property proves to be a winner; the investor makes a nice profit, and then goes looking for another deal. Then the flip side of beginner's luck kicks in, also known as the 'sophomore jinx.' What seemed so easy with the first property proves difficult to reproduce. Only then do they ask, 'How do I know how much it is worth?' 'How do I know the seller is telling the truth about the cash flow?' 'How can it be financed?' 'How do I raise the down payment?' The uncertainty can be overwhelming. Empire or Job?Then there is the investor who has it all figured out. They are buying machines, and over time they acquire a minor empire of every different type of properties'some good, some bad'but with little in common other than the owner. But the empire has a dark side. Just keeping up with it all is a full time job, and make no mistake, it is a job. Maintenance, delinquencies, skips, evictions' the list goes on and on, never ending and without regard for holidays, sickness, or vacations. This is the investor who wakes up in the middle of the night fixing problems in his dreams. When morning comes and the alarm goes off, eyes still blurred with sleep and sees the alarm clock flashing 'SELL!' I think real estate is one of the best ways--maybe the best way--for everyday people to build wealth. I've spent a lifetime in this business and lived all three of those scenarios. I know what it is to be outside looking in, and I know what it is like to want out. Real estate can produce whatever lifestyle you desire, but it can also swallow you whole if you are not careful about what you acquire and how you acquire it. This is not theory for me. I've learned some hard (and expensive) lessons along the way. Strategy = Thinking things through
Over the years I have had the great fortune to see many plans come to reality. I've made deals with outlandish profits and had others turn south almost from the start. Most importantly, I've learned how to spot the difference between the two. I've learned that the more attention I put into the deal up front, the more money I end up with in my back pocket. I've been guilty of slipping back into my old ways. I've gotten involved in deals when I did not do the requisite thinking and lived to see them die on the vine or blow up in my face. Some of us have to "hit the wall" more than once before the lesson becomes permanent. Whether you are just starting out, trying to get bigger, or even trying to get out, the job is a lot easier when you have a plan to guide you through the maze of choices. Ideally that guide would be personal, leveraging your strengths and desires and avoiding your weaknesses. In short, an investment strategy. Strategy is defined as, 'A plan of action intended to accomplish a specific goal.' If we desire a specific outcome, then we must be willing to do the footwork--to think it all the way through before we begin. And we start by identifying the goal. A four-point plan to intelligent investing
First, get your personal financial house in order. Orient your financial affairs to serve your purpose of building wealth. Remember my favorite truism: Opportunity without the capacity to capture it is an illusion. Next, form your criteria for property type, size, and location. Each property type requires a different set of skills and offers varying levels of return. It is much better to fit the property to the investor's strengths, rather than trying to make the investor fit the property. In the same way, there is no national real estate market. Only by observing your local market can you identify opportunities that are within your capacity to act upon. Once you've identified a potential deal, learn how to accurately value a property based on its condition, your return requirements, and your borrowing power. Understand why 'What is it worth?' is the wrong question, and how to answer the right question: 'What is it worth to me?' And finally, learn how to structure deals and make offers too good to refuse. Act decisively, then be prepared not only to reap the profits, but keep them. Tax planning and asset protection is a key component of building wealth.
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