Real Estate Investing - The Big Picture

The Big Picture
Even the greenest investor knows that examining the big picture of a potential investment is vital. When examining an investment, most of us look at the cashflow and ROI (return on investment). Of course cashflow is important (it's #1 on our list of considerations; why else would we invest if not to make money?) but it shouldn't be the only factor to consider when you decide if an investment is sound. Read on to see what else you should consider before you dive into the investment deep end.

Positive Cashflow - as I mentioned, positive cashflow is the backbone of any real estate investment. After all, why else would we bother investing if we weren't making money? But there is a reason this "obvious" factor makes our list, and comes in at number one. Emotional investing is a very real entity, even amongst the most seasoned investors.

Limited Risk - A myth in the investing world is that the higher the risk, the higher the return. The truth is, a savvy investor can choose an investment strategy, such as a rent-to-own strategy, that is both low-risk and high return, IF the investor knows what to look for.

Clean Exit Strategy - just as important as positive cashflow, your investments MUST have a well-thought out and clearly-plotted exit strategy. Before you invest, you should have a well-mapped exit route that ensures maximum return for both your money AND your time.

Time Leveraging - This concept is one most investors miss, but once grasped, leveraging can be one of the most powerful ways of duplicating your time, money and energy. Plainly put, your investments work for you while you're doing something else - like sipping pina coladas on the beach, perhaps?

Keeping Costs Low - this is another factor of investing that is often overlooked. Most investors, especially new investors, look for high return and low investment. But low costs throughout the investment is just as important to your bottom line as low initial investment and high returns.

Risk Minimization - not to be confused with limited risk, which speaks of the investment risk as a whole. Risk minimization contains strategies one can implement to keep risk low as your investment works for you.

Hog vs. Rabbit Investing - Is your portfolio dominated by one or two "hog" investments, or are your investment choices allowing you to duplicate ad expand your portfolio (a rabbit investment).

This list is just an overview, but all aspects should be taken to heart. Over the coming weeks, we will look at each point in detail to help you maximize your portfolio, increase returns and make your investment choices work FOR you, instead of you working for your investments.

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