By Neil Fjellestad and Chris DeMarco
Real Estate as an investment remains a mystery to many. There are raving fans that believe or would like you to believe that real estate is a sure bet. There are also rash critics that see nothing but risk and loss every time real estate is mentioned as an investment alternative.
If we think about it both must be right to some degree. The purpose of this discussion is to illustrate that there are some realities that are ignored or misunderstood by both. Take a closer look to discover that there are standards for investment success. Whether followed or not, the outcome is reasonably predictable.
All successful investment begins with deliberate strategy and a plan. What are your personal objectives? Security against principal loss; potential or predictable growth appreciation; durability of future income; tax-favored investment return; inflation hedge and liquidity access are possible objectives to consider.
Successful investment strategy is more than one or two transactions: execution requires patience and allocation of resources. Performance can be measured and improved with “best practices” applied by trusted advisors and professional business managers.
Develop a philosophy of an independent investor. Real estate should be acquired and held long term (not sold) in order to qualify as part of a working strategy. Eventually, independent ownership without partners that is debt-free enjoys the highest investor rewards and pride of ownership. Many mistakenly think real estate is to buy and sell. This approach is dependent upon external conditions and the results are reduced substantially by costs surrounding these events. Transaction real estate is by definition speculative, not strategic.
To be continued with Part Two- Standards 4-8 here: https://fbs-pm.com/2020/07/29/standards-for-serious-real-estate-investors-part-2/