Search Results for "smart way to invest"
Commercial Real Estate Investing: Building Residual Income with Real Estate
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the people of Sucre, Bolivia - Horno Ckasa'B
Greetings from Southwest flight 1398 to Phoenix, AZ.
I am on my way to meet with the team from Food for the Hungry Bolivia. I am looking forward to connecting with the Food for the Hungry Boliva staff. I sure miss the community of Horno Ckasa ‘B.
Anyway…..
When I first started investing in real estate, what attracted me most was the ability to build “asset” wealth quickly. I felt as long as I focused on building assets the cash flow would come. Well….like most “newbie” real estate investors, the harsh reality is ….it is not that easy. Especially, when you are leveraging yourself into assets and especially with residential real estate.
I discovered the hard way that leverage is good…but a lot of it can hurt you. I don’t believe in having personal debt (other than a reasonable mortgage). I do believe in having business debt. But business debt can get out of hand went you are leveraging everything you can….but I digress. I will share that thought in another post.
When I entered into commercial real estate, cash flow was a little easier….obviously with “cash flow” properties. It was when I leveraged myself into distressed properties or land where it got tricky.
Today’s post is how “smart” real estate investing can build residual income. From my experience, I have not always been a “smart” investor. To this day, I am paying for mistakes. So I hope as go through this “investing” adventure together, you can learn from my mistakes.
So…..
Building Residual Income Using Real Estate
There are endless ways to make money in this world, but if you are looking for the kind of investment that can not only help you in building residual income but also freeing yourself from the daily grind then real estate investing may be your “vehicle”. With the recent crash in the equities markets and 401Ks being cut in half many people are looking for more stable, secure and hands off investments. Smart real estate investing fits that bill and can set you free. The key pharse here is “smart investing.”
Every working stiff knows how to collect a paycheck. You dust off the ol’ resume, put on your best interview clothes and start to pucker up. Working for someone else, forty hours a week can make you well off but it will never make you truly wealthy. You’ll never control the means of production so you’ll never be truly rich, or independent for that matter. The tidal wave of layoffs going through the country is reason enough why many people need to work on building residual income.
Residual income is money made from an investment or business that pays you dividends over time for work done up front. Many people create these kinds of businesses through the Internet or through traditional means and turn them over to talented managers. Yet a great way to make some extra money, maybe even enough to quit the daily grind, is to build up real estate investments over time.
Imagine this scenario. You take 10% of your annual income and put it aside. This amount is then used as down payment on a piece of real estate. You rent that real estate out for more than the monthly expenses and keep the profits. The tenant covers your costs and you make extra money. This is one of the best tactics when it comes to building residual income because you will continue to make this money as long as you own the house. You can even pass it down to your children!
While many people think about real estate as a traditional single family home rental, the options are endless. Commercial real estate like office buildings, retail shopping centers and apartment complexes all offer the same help in building residual income yet spread the risk out amongst many tenants.
While at first you may only be looking at an extra couple of hundred dollars a month in residual income if you continue to repeat this process and roll your profits into new properties you will soon have a burgeoning real estate empire. Best yet, the longer you hold the properties the more equity you build up. If you ever need a large infusion of cash to cover a new car, college tuition for junior or your spouse’s new found addiction to slot machines you have money just sitting in your houses.
Sticking to the fundamentals, having an experience mentor at your side, staying humble, and continuing your education will give you the results your want…..a big residual check. Going your own way….or feeling invincible are sure signs of failure. Sounds like I am speaking from experience does it not?
Until next time…….rob
Seizing Unique Opportunities—Do the Risks Outweigh the Value?
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Hey...check me out! I am stylin' and I am going for it!
Greetings from the metropolis of Cedar Crest, NM!
Today I celebrated my 39th birthday…on my journey to 40…..yikes! I remember trying to burn my parents house with a magnifying glass at the ripe age of ten….now…wondering if my ten year old is trying to do the same.
I was talking to my childhood friend, Efrem, this morning and he told me he was getting ready to attend his twenty year reunion. The word “twenty” rang in my ears long and hard. What happened to the ten year reunion? I feel like I just graduated from college….grad school….did I just sleep through it all? Possibly….but more importantly, A quick reminder that “the time you have is all the time you got.”
Anyway….
Today’s topic is taking the plunge into doing your own thing. Specifically, investing in real estate. I remember not to long ago taking a leap of faith and trying to do my own thing vs. “working for the man.” It was a scary time. Leaving behind the security of a job and seeing if I could make a go at real estate investing. There were a lot of scary times where I felt failure was eminent….but somehow….it has all worked out so far. That was eight years ago. First investments were residential homes…then small commercial deal…then it grew from there.
The one thing I learned is that starting your own business is like having kids. It is never the right time, it is never going to be the right time, so the time is NOW.
So….what is your next step?
There’s an old saying that you can’t win if you don’t play the game. And, it’s true for real estate. If you don’t take the plunge, you
can’t collect the money. But, at what point do you decide the risk is worth it?
Understanding What’s A Good Fit
Being proactive is generally a safer risk strategy. This means that if you take the time for self-assessment and research, you will better understand your risk mitigation comfort level. If you are a first time investor, you don’t want to sink your capital into something that requires sleepless nights, tenant hassles and more money than what you are bringing in from the investment. On the other hand, if you are a seasoned investor, you have a good idea what types of property will work for your investment personality and will automatically steer yourself away from risk that is beyond your tolerance.
Looking With a New Perspective
Once you know what your risk tolerance is, do not limit yourself to a certain investing mindset that fits properties into your portfolio. You may “know” you want to invest in an office building that is an “A” level property with a certain dollar amount. However, you may realize even greater earning potential by looking at unique opportunities. Choose to focus on the risk level of a property and determine if that will fit your portfolio.
Risk Mitigation—Bringing Balance To Generate Cash
According to businessdictionary.com, risk mitigation is the systematic reduction in the extent of exposure to a risk and/or the 
likelihood of that risk occurring. By looking at investments through a risk mitigation perspective, you can begin to analyze your investments as big risk/high potential rate of return, big risk/low rate of return, medium risk/medium return, low risk/high rate of return and low risk/low rate of return.
Smart beginning investors will grow their portfolios with both high potential rate of returns and low risk properties. This allows smaller and more steady cash flow from less risky investments to cover gaps from more risky investments.
Making It Work
Investing in commercial real estate should focus on generating cash flow, not generating unbearable risk. But, how do you make this work?
Let’s look at an example:
A property in your desired market area that you have classified as high risk/high potential carries a high investment cost. However, extending your desired market area by 50 miles opens the opportunity to invest in a low risk/high potential with a substantially lower investment cost and brings tax incentives because it is considered a lesser-desired area. If you first invest in the low risk/high potential, you can build the wealth from the investment to then also invest in the more risky and costly investment while covering any gaps that may result from the risky investment.
But What If I Really Like Risk?
As with any investment strategy, there is no one right answer for every investor. If you want to take the plunge and throw it all 
into a risky investment, you may have a substantial payout. You may also lose everything. Decide what you can handle and then grow your wealth!
Well…until next time…..rob
So You Want To Be An Investor…What Now?
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Take action huh?
Greeting from the metropolis of Cedar Crest, NM.
Now that basketball camp is over for my boys, swim team for my oldest rolls right in. My son Colt has his first swim meet tomorrow in the big town of Albuquerque. This should be interesting since I have never been to a swim competition before.
Anyway…..
Today’s topic is taking the first step in real estate investing. When I first made the decision back in early 2000, it was due to a real estate investment book I bought at the local book store. When I first read it….it clicked right away. I knew real estate investing was where I wanted to be. I read the book again and again…then went out on my own and quickly figured out…I needed to know more. That was when I signed up for the bootcamp….yeah…it cost 5K or 7K….which, at the time, was a lot! But it was the most important thing I did. Little did I know how my life would change. The decision to invest in real estate lead to Grassland Investments, Jaxon Texas Property management, Tumbleweed Row….etc…etc. From that one decision, I became friends with Emily Cressey, Peter Conti, Diane Kennedy….and the list goes on and on. So…If real estate is in your future or you are already deep into real estate investing but want to make the leap to commercial real esate investing….here are a few thoughts…….
Taking the next step….or jumping off a cliff?
If you have already figured out that you are ready to invest, you have taken the first step toward building your wealth. Your next best step toward smart investing is to do your research. Along with your research, you should find a mentor or seasoned investor that you can align yourself with. Mentors are invaluable assets when you are starting your investment career because they can steer you away from riskier decisions with low payouts and help you navigate the investment process. If you’re reading this, you’ve already found a great group of experts at TheRealWealthBlog.com who can mentor you as you begin your career.
Should I take a Course?
There have been several posts on whether real estate investment courses are worth the money. Real estate investment courses can provide participants with a wealth of knowledge and new tips and tricks for their portfolios. They also can be hundreds or thousands of dollars that would have been better spent on the riskiest of investment. Aligning yourself with a mentor and asking his or her opinion on the course is a great way to evaluate the merits of spending the money.
Should I Look For Properties?
Instead of diving straight into what looks like a great deal, it is better to spend the time arming yourself with the knowledge of what a great deal looks like. A beginner’s assessment of a great deal is going to be very different than an expert’s assessment. And, your first deal will be an emotional accomplishment as well. Having a mentor or relying on the advice of experts, like TheRealWealthBlog.com, can help you determine whether your first deal is the right one.
What Else Should I Do?
1) Educate yourself about your market
2) Find out who the “movers and shakers” are
3) Identify key commercial real estate brokers
4) Find people who are doing what you want to be doing (find those who are successful in commercial real estate investing)
5) Get familiar with comparable properties in your market. Examine how they have performed and determine what amount of work goes into managing them so you are prepared when the right opportunity presents itself.
6) Take action in the right direction…now is not the time to get A.D.D.
And, if you have questions, contact the experts at TheRealWealthBlog.com!