Real estate investing can be an exciting adventure and a very lucrative business. But it’s that seductive high profit potential that makes many investors jump in with no net, no plan and very often, no resources. The truth is that real Romeo Abdo estate investing is a risky investment. In order to minimize those risks, investors must take specific steps before jumping in. Below are 7 strategies for minimizing your risk with real estate investments.
1. Define your Financial Goal
Have clarity about what you want from a financial investment. Many investors make the mistake of falling for someone else’s idea of what’s a “good deal.” The truth is that everyone has their own different financial goal. You should be clear about your own goal. Are you looking for quick cash? Are you looking for monthly cash flow? Are you looking to park your money for a few years and get future appreciation? The clearer you are about what your financial goals are, the easier it will be to gage if your investment is on track or not.
2. Find your Purpose for Wanting to Invest
Real estate investing can be very intimidating and it’s easy for a new investor to be paralyzed with fear even in the presence of the “deal of a lifetime.” The truth is that real estate investing is a number analysis game that can easily be stopped by emotions. To keep yourself from getting overwhelmed and hiding under a rock, be aware of your motivation for investing. Are you looking to eliminate debt? Are you looking to secure a financial future? The vision of your purpose will keep you in the game.
3. Select your Investing Strategy based on your Financial Goal
There are many, many, many ways to make money in real estate. So, to avoid being swayed by the “deal frenzy,” you should always select your investing strategy based on what you already decided that you wanted financially. This will keep you from buying cheap vacant land when what you really want is cash flow. No matter how tempting that cheap vacant land is, it’s not in line with your goals. Pass it up or change your goals.