You find yourself sitting down across the desk from one of our expert investment counselors. They’re trying to find out which real estate scenario fits your situation best. What are they going to look at?
First off is your risk tolerance. We always recommend prudent financial techniques. That’s a given but even within the realm of “prudency” lies some wiggle room. We need to find out what your comfort level is. Are you an aggressive risk taker or very conservative?
We’ll talk to you about time horizon. It makes a difference if you’re a young whippersnapper just starting out your life’s adult journey or a 50+ year old soon to be retiree. These two examples are not at the same place in life and the real estate game plan needs to be structured accordingly.
What are your goals? What do you want to get from income property investing? Are you looking for cash flow to help with the monthly bills or a far-flung real estate empire to send The Donald into a jealous rage of envy? You’ve got to really think about this one and get specific. Aimless wanderers tend to not do well in real estate.
What is your expected retirement date? You’re not planning on working your fingers to the bone the rest of your natural life, are you? We certainly hope not. Now maybe you happen to have an occupation you love and never want to quit doing it. That’s fine. By all means, work away to your heart’s content. We appreciate the value of an honest day’s work but even in that case wouldn’t it be nice to be working because you want to and not because it’s the way you make ends meet?
Do you want cash flow or appreciation? There’s no wrong answer but this basic decision will guide your strategy in the beginning. Not to say you can’t ever change your mind. The problem arises if you want cash flow on Monday and then appreciation on Friday. Whichever one you pick will need to be adhered to for at least a moderate length of time to be successful.
Next time: financial analysis and leverage!
