Whenever you do anything that requires a new knowledge base, it is important to have a plan. Actually, many more things in life require a plan and maybe life itself needs a plan.
If you are considering real estate as an investment vehicle, then you need to not only have a plan, but also acquire a new knowledge base. Without these tools, you will set yourself up for a lot of mistakes and possible failure of the idea.
Anyone can invest in real estate. But to do it well and make money at it is a different story. Let’s start with a basic plan.
First things first… what will your journey look like? What do you want your end result to be? These are two big questions you need to answer before you can start working a plan. Do you want your journey to be rental properties? If so, how many? What kind of tenant market do you want to cater to? Or do you want to work on fix and flips? Commercial? Residential? Etc. You need to be very clear about this. As much detail as you can gather.
Next you will want to decide how you will invest. Individually, as an LLC or some other entity. Will you have a partner?
Funding is also a big topic. Do you have funds for that first project? Or do you need to do a self directed IRA? Borrowings funds? If so, how? Taking a line of credit against an existing property or borrowing from family/friend or hard money lender?
What do you intend to do with the money you make? Fund the next deal? Kid’s college tuition account? Vacation? IRA funding?
Exit strategy- you will need to evaluate what your exit of the business plan will be. Retirement? Selling off all inventory if you are holding rentals? Are you just going to stop fixing and flipping?
These are very basic steps. There are a lot more to consider for your plan, but the above will get you started thinking for sure. Your plan should be in writing and be a document that you can update and change as you review it, educate more or if you are able to jump off and do, you make need to tweak your plan over time.
Just like any other business, your real estate investing business is simply that… a business. You need to treat it as one and plan for it. Then work the plan!
For more information on real estate, Lisa has a second blog at: www.jerseygirlforeclosures.com