The 4 Keys to Correctly Investing in Real Estate

The average person doesn’t know how to get started investing in real estate, and therefore, gets their cash flow from a nine to five job. That scenario is the exact opposite of financial freedom because they’re dependent on a job they have to go to every day. True financial freedom happens through investing in things that create an ongoing revenue stream.

Real estate investing may look like a risky business to some. It definitely can be, but there are ways to minimize that risk. Ultimately, anyone who works smart enough and hard enough can use real estate investing as a way to increase their wealth. So here are a few of the keys to investing in real estate:

  • Pick moderately priced properties. Keep in mind that expensive homes in sought-after areas usually have low cash flow returns. You’d be better off investing in a more moderately priced property with a higher cash return.
  • Know the neighborhood. Don’t buy a property in an area you’re not familiar with. Ideally, you’ll want to invest in your own area or nearby. If it’s an unfamiliar neighborhood, do some research and learn about its attributes and drawbacks. Find out how the schools rank, what the crime statistics are, and if there is any noise or air pollution that could affect your ability to rent out the property.
  • Choose one investing strategy and master it. Some people get caught up and lose focus. It’s easy to get distracted, but if you want to be a successful real estate investor, don’t give in to the temptation of dabbling in a bunch of different strategies when you’re just getting started. Focus on one investing strategy, master it, and then you can try out something new.
  • Learn from the experts. Join a real estate investing club and start networking. It can be a local professional organization, or a Facebook, or LinkedIn group. Invite a local broker to lunch and ask them questions about their experiences. Don’t be shy, but also be courteous. (And definitely pick up the check!) If you want to be successful with real estate investing, surround yourself with successful real estate investors. Also, constantly educate yourself: read new real estate books, blogs, and any other media about real estate trends and investing strategies.

Facebook Forum – Question of the Week

If you are a premium member of KenMcElroy.com you are invited to join my new Facebook group! I’ll be jumping in to answer questions from you about real estate, leadership, entrepreneurship and life. I’ll hope you’ll join me in this new forum. If you’re not a premium member sign-up here, and then send a request to join us on the inside.

Each week I’ll pull a question from the forum and present it here. Below is this week’s question.

Do you think we’re close to another market crash like in 2011?

Ken McElroy:

“I don’t. That crash was excessive lending that led to poor buying decisions which was all unmanaged. Lenders are much more stringent right now which is good. Right now we might see crashes in Retail RE and possibly Malls and Office (mostly due to direct to consumer) purchasing. Multifamily and Industrial is VERY strong and shows no sign of weakness into 2020.”

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