Understanding real estate market fluctuations and risk analysis

I’m sure you have heard the expression location, location, location! However, I prefer to focus on timing, timing, timing!

One of my biggest pet peeves is when people, who don’t invest in real estate, speak negatively about investing in real estate and attempt to sway others from doing the same. This happens too often if you ask me and is sadly pathetic to be honest.

What type of investor are you?

There are basically 4 investor profiles that I can think of. Observers, Owners, Speculators and Investors – and each have their very own distinct characteristics.

I often tell my clients that building wealth in real estate is relatively easy if you follow some of the proven models and systems. In fact, one has to go out of their way and try very hard not to become very financially well-off.

One of the benefits of owning investment properties is that it allows investors to build substantial wealth over time through build-up equity (appreciation and debt pay down). Investors, who naturally see equity and cash as opportunities to invest more, often debate whether or not to liquidate parts of their portfolio to fund further ventures.

Value is a word that should never stray too far away from an investor’s vocabulary. As previously discussed, investors must always be aware of their financial net worth, which directly relates to the value of their real estate portfolio.

Speculation is one of the riskiest forms of real estate investing. Speculation occurs when an investor makes a financial decision based on hypotheticals and guesses, not facts.

If I had a nickel for every time an investor rented a property without a lease, I would have about $2.85!! It simply happens too often. A solid lease agreement is the basic foundation to protecting and securing an investor landlord against possible financial shortfalls from bad tenants.

A vendor-take-back mortgage is just one of the many creative ways in which investors can acquire multiple investment properties. With a VTB, the seller basically lends the buyer a percentage of the purchase price and registers a secured mortgage against the property in the name of the seller. The seller, in essence, becomes the lender.

A rent-to-own agreement is essentially a 2-in-1 agreement which includes a standard residential tenancy agreement with a purchase option addendum. Typically the agreement includes a clause wherein the landlord/investor saves a portion of each monthly rent payment to be used by the tenant if and when they purchase the property.

Every investor, at some point, reaches a road block in terms of their ability to obtain mortgage financing from major banks and mortgage companies. This is to be expected and really cannot be avoided.

Most clients are confused when it comes to mortgage financing. Deciding which rate to choose, which term to choose and comparing other conditions can certainly seem like a complicated process.

I made a very big mistake early on in my investment career by spending money on the wrong items for my property. The difference between capital expenses and renovation expenses is about as clear as mud however there are some distinct differences.

Simple tricks and ways on how to acquire an investment property with little or no cash investment.

If you’re like me, you have never won the lottery (yet), have never received an inheritance and didn’t come from a wealthy family. Not to worry though, I started with nothing too.

Looking at the common excuses people make for not investing in real estate.
It never ceases to amaze me why people choose not to invest in real estate. I mean the models and proof are there. Over time, real estate is the best and most secure way to build wealth, guaranteed.

The ins and outs of landlord and tenant issues.
Face it, if you are going to own investment properties then you are going to have to deal with tenants. And I still have not met one single landlord who doesn’t have some “interesting” tenant stories.

Guidelines on which properties to buy, which to avoid, and when to take action.
I often see novice investors make extremely poor property purchases as a result of too much ambition and a lack of market knowledge.

“Flips” are a great alternative to rental properties and can provide some tremendous benefits to an investor’s bottom line. Unlike rentals, which provide slow and steady financial growth over time, flips can provide opportunities for quick and large cash profits.

Net worth is a screenshot of an individual’s financial health and one of the most important financial calculations used by investors.

It’s no secret that one of the clear benefits to owning and investing in real estate is that it can provide stable income, or cash flow. Specifically, and ideally, an investor will seek positive cash flow when analyzing and comparing investment options.