Despite the collapse of the housing market in 2008 and its ongoing residual effects, investing in real estate is, over the long haul, a tried and true way to generate wealth. Real estate investments have a couple of things going for it that other investment opportunities do not.  One is that land as a resource is finite.  More of it is not going to become available. Another is that real estate is a matter of supply and demand.  The more demand there is for this finite resource called land, the more the value of that resource appreciates.

Entrepreneurs looking to invest in real estate as a way to accumulate enough wealth to offset inflation and ever increasing taxes might consider these following tips before they dip their toes into real estate markets.

  1.  Do – plan your financial goals when investing in real estate.  Just as you plan your financial goals with any investment, develop clear, realistic expectations for your real estate investments.  Remember that the concept “time is money” holds true in real estate investing as it does with any type of investing.
  2. Don’t – waste a lot of money on tapes, books, seminars, whatever about real estate investing and never use them.  Having clear, realistic expectations and goals will help you choose and use your learning tools wisely.
  3. Do – look at a lot of properties.  Rule a variety of properties in, not out, early on in your discovery, research and decision making journey.  Get all the objective data and history you can through public records, sales histories, income generating histories, tax histories, etc.  Have an open mind.  Size up potential properties based upon you clear, realistic and doable goals.
  4. Don’t – postpone acting upon a potentially “good” investment while waiting for a “perfect” one.  Know that there are no perfect deals and even if you miss one, there will be another potentially good one down the road a bit.  Be patient while being proactive.
  5. Do – do a thorough analysis.  Know the real numbers, the real tax returns, tax bills, maintenance costs, the real income and the real expenses. Research the real cash flow, the total return on investment, the cap rate, the cash-on-cash return.

And remember that all successful real estate investments have ebbs and flows, just like all investments.