Real Estate Investing Planning
You want to go out with friends tonight. What would you do? Obviously! You will make a plan. What is that plan? It is a systematic way of chalking out a simple fun-filled outing. Likewise, when you are going to make a career choice or more importantly an investment choice – you will have to make a plan on how do plan to go about doing a particular thing. Now think about your own country. Why does a country have a 5-year fiscal policy or any 10-year plans? The answer to all these questions is to anticipate the challenges before you get into something and have a plan B or a solution for the same.
Your next logical question would be Why plan real estate investment? I will like to give you this answer in 3 parts:-
- The first part will talk about the vision in real estate investment
- The second part will talk about matching your visions with your actions
- And finally, the third part will talk about why plan real estate investment
Let’s talk about Real Estate Investments. Everybody who enters into real estate investment has his own goals and aims. Some have a 10-year retirement plan, some have a 5-year retirement plan and some do not have a plan at all. Out of these three things, not having a plan at all is the most dangerous part. Not having a plan increases your chances of failure. The most common vision and goals are Tax deduction and Increasing cash flow with little or no money involvement.
Now once you are clear, about your goals and visions of entering into real estate investment, the next logical step would be taking the necessary actions. A few questions to keep in mind here are for how long do you plan on holding on to an investment, Will it be Buy and Hold process or Buy and Sell process that you want to follow, What is the mortgage that you will have to pay, etc. Once you have answers to all these questions you then go and find the right property or area to invest in.
Finally, you have made the investment but for how long. This is where the real estate investing plan comes into the picture. If you do not have a plan you will not know when to hold and when to sell. You will not be prepared with the answers to questions like an increase in interest rates, the market scenario, when to buy and hold the property and when to buy and sell. Hence, comes the concept of Real Estate Investing 5- year plan.
When you make your plan, you think about everything in advance. The investments, the depreciation and appreciations, the problems and solution. Once your plan is ready you just have to re-engineer is and keep looking at it every 4 or 5 months to make changes if required. Always remember, having a plan doesn’t confirm that you will not fail. It just helps you to come out of it faster.