If you are serious about real estate investing as a way to create a more successful financial outcome in your life, I suggest you approach it in the same way you should be approaching your daily spending activities — with a plan! Create a basic plan that includes the following:
- How many hours each week you will spend researching opportunities.
- How many properties you plan to research each month.
- How much money you plan to invest each year in real estate.
- What the minimum return on investment you will require from each property.
- What type of properties you plan to research and invest in.
- What type of funding you will need to pursue in order to purchase these properties.
Once you have a plan for what you want to accomplish then use the following tools and techniques to track your activities according to that plan. I suggest my clients use these techniques as a way to ensure greater success.
1. Use Property Tracking Form to Keep Track of Stats on Each Property. One of the best ways you can learn to put your money in motion is by recording detailed information about each of the properties you have investigated. Forms such as a property analysis, buyer’s property inspection report, and property renovation analysis are available free of charge by contacting me directly: email@example.com. These forms should be used for each property you are researching.
2. Use the property research formula to track properties:
Remember, the deal of a lifetime only comes along once a week!
This means that if a particular property doesn’t look like it will provide the return on investment you require based on your real estate investment plan, don’t be fooled into thinking another great deal won’t come along for another year or so. Just move on to the next opportunity as quickly as possible, tracking property statistics, return on investment opportunity, and cash flow potential. The more you work at and practice applying the formula for tracking the properties you are researching, the quicker the really terrific deals will present themselves and you will be less likely to jump at the first offer that “feels” promising.
3. Track all necessary variables. One of the most important things to evaluate is the location of a particular property. What determines a great location? High demand created by a number of different variables. Following is a list of basic variables you should be tracking to determine the best areas in which to be looking for lucrative real estate opportunities:
- Rate of construction
- Industrial relocation incentives
- Job growth
- Suburban sprawl
- Quality of housing
- Quality of area services
- High demand (or migration): the real estate market moves in cycles; watch these cycles to see where people are migrating to take advantage of jobs and other economic factors that affect demand.
4. Use proper cost basis accounting procedures to track activities. Because your real estate activities should be treated as a business, it is advisable to use basic accounting procedures to track those activities. Be sure to create a cash flow statement, balance sheet, and income statement for your real estate business to help track each property’s return on investment. In addition, remember to document and deduct all your real estate research and finding activities to take advantage of the most tax savings. This will include:
- Business mileage
- Phone and Internet costs in researching properties
- Overnight travel, food, and lodging (as part of legitimate real estate business activity)
- Meals and entertainment (as part of legitimate real estate business activity).