The primary reason why real estate investors fail to achieve the outstanding results that only well executed real estate investments can produce, is the lack of an overarching long term strategy. We call that strategy, The Blueprint.
Why do I need a Real Estate Investing Blueprint?
Most long term investors understand the basic dynamics at work in an investment property. You start by purchasing a good property in a great location with great schools and tons of growth potential. After renting it out, if your incoming rents exceed your expenses you’re making money. As a matter of fact, when you look at the money invested versus the positive cash flow produced by the property, you are earning a pretty nice return on investment. So far, so good. This is the specific point where the lack of strategy derails everything. And it can happen in different ways:
Take a wrong turn towards “Too Much Risk” Highway - This happens when you get seduced by the positive cash flow and you want more NOW. So you buy and you buy some more until you can reach the income number you need to be financially “free”. The end result is a portfolio made of a lot of homes, a lot of debt and and bright “career” in property management. It would be funny if it weren’t so dangerous. That type of strategy comes with a front row seat to “Murphy’s Law: The Musical”. Anything that can go wrong, will go wrong if you play with risk long enough. There are better ways to achieve the same result on the cash flow side with a growth component to boot.
Sit on your ROI laurels and settle for coffee money - Some investors tend to look at their investment properties like a stock holding or a mutual fund and focus exclusively on return on investment. On some investment properties, the cash on cash return (that is the positive cash flow over the cash invested in the property) can be as much as 15-20%. So if you focus strictly on ROI you can lose sight of what a well thought out strategy can accomplish. In other words you sell yourself short of what you’re capable of achieving. Remember this: Real Estate investing is about growing the capital first and cashflow second. If you skip the first step, the results you will achieve will be underwhelming (i.e coffee money) to say the least. And who wants to settle for free coffee when you can own the coffee shop instead. Think about it…
Chase the thrill of cheap (and inferior) properties - It never fails to blow my mind that most investors I meet think of themselves as long term investors and yet they make investing decisions based on short term factors. Let’s say you are a new investor about to get started buying your first investment property. Be honest, where are you going to start looking first? Most likely you will start looking at foreclosures, right? Because everything you hear about real estate investing is about buying it dirt cheap and that’s how you make your money. Making your purchasing decisions on the “current equity” of the property alone, is a recipe for underperforming results. Instead, The Blueprint will shift your focus into the long term future and align it with your goals for stellar results.
How to invest with REI Architect
Here are eight articles that will help you understand our real estate investing philosophy:
- How to position yourself to buy your first investment property
- How to find a great investment property
- Why Equity doesn’t matter
- Getting an early start [Case Study]
- Numbers never lie. Or Do They?
- Weaving real estate investing magic: Crafting a Blueprint
- Seven powerful tips on investment property management
- How to be successful
What’s a Blueprint anyway?
On the first phone call with new client I always ask this question: Why are they investing?
Because, you see, it’s never just about making more money or building a stream of income or whatever. There’s always a reason behind that. And usually they invest because they want to build something beautiful. A worry free retirement, a college fund for their kids or grandkids, a lifestyle that will allow them to see the world.
And yet, most investors go about building it without a plan, a strategy, a Blueprint. They just buy a house here, a condo there at random then wonder why what they end up with isn’t what they had in mind.
You know what your beautiful thing would look like. I can give you the Blueprint to build it. It’s that simple.
Whether you are a new investor wanting to get started investing in real estate the right way or a more experienced one that hasn’t been getting the results that are possible, it all starts with a cup of coffee. We sit down and talk about the goals you are trying to accomplish by investing in real estate. Then we craft a custom strategy that’s aligned with those goals and execute it like a well oiled machine. Throughout the process, we will be there guiding you and helping you. And let me tell you, when the right plan comes together, it’s a thing of beauty.
Give us a call today at 713.922.2720 and let’s see if there’s a fit.