As with any investment vehicle, the goal is a moving target. To win the real estate investing game, you have to stay educated and informed on the latest information. Things like market conditions and market positions.
Great investments do not just happen they are created. 2012 has definitely brought many changes to the real estate investment industry. The biggest change is the growing competition.
Two new segments entered the real estate investment area in 2012.
The New Investor:
51% of all investors in real estate in 2012 were new to the investment arena. Congratulations to all of you who got informed and made things happen. Your eagerness positioned you on your way to great wealth and shows that due diligence will prevail and investments (once informed) are not as complex and intimidating as you first thought.
Wall Street and Hedge Fund Managers:
Hedge fund managers have access to millions and billions of dollars that we as individual investors simply do not have. They like to swarm into markets like locusts and buy everything they can get their hands on.
With all this added competition how do you win the real estate investment game in 2013?
First you want to understand that everyone has their own investment style and types of investments they desire, so not everyone is in direct competition with you. Do not be intimidated by the masses. All you need to do is get and stay focused. After all you do not need the entire pie, you just need your slice. With trillions of dollars in real estate being bought and sold each year you just need the good stuff that will fulfill your objective.
Finding A Real Estate Investing Focus
The first thing to do is take the emotion out of your decisions. People buy the home they live in with emotion, but you MUST purchase your investment properties with LOGIC.
So you will want to sit down and make some notes:
- Why do you want to invest?
- What do you want to get out of the investment?
(Don’t say “I just want anything that will make me money”, this to me makes the same sound as someone running their fingernails down a chalk board, uugghh)
Do as the seasoned investor does, create a plan. You MUST know what you want long term out of your real estate investments. Is it cash flow and what do you want the cash flow for? (hint: it should be to reinvest and build a big portfolio, but hey this is your plan) or Are you looking for long term capital growth? (my personal favorite) or maybe you want the lifestyle investment where you can own property in a beach front, golfing or mountain community and visit it from time to time, meanwhile having someone pay for the mortgage and expenses.
Take your time on this and write down your plan. Things to consider for your plan:
- What is your investment strategy?
- What type of properties do you wish to invest in? (single family homes, multi unit buildings, etc.)
- How long do you plan to hold your investments?
- What are you most planning to get from your investments?
- How do you wish to take ownership to the property (Trust, LLC, etc?)
- Which markets interest you the most and why?
- How much do you currently have allocated to invest?
- What is your source of funds?
- What type of returns are you realistically expecting to receive?
- What would you like to accomplish in the next 5 years with your real estate investments?
- What are your exit strategies?
- Any additional items of importance to you.
As you enjoy bringing in the New Year give a lot of thought to these items and make 2013 as important to you and your family as the big investors plan on doing for them and their families.
Win the Investment Game! Happy investing!