Rules of successful real estate investing

Once you have set your eyes on the real estate market, the first step would be to gain more clarity on your investment goals. Yes, defining clear and specific investment goals is the initial step towards becoming financially independent. Writing down specific and detailed goals makes you far more likely to achieve financial independence, say experts. For instance, you can list down details such as the number of properties you wish to acquire each year, the annual cash-flow they generate, the type of property, and the location of each.

Speculation has no role in major investment decisions, and you will have to completely rely on facts and market analysis. Therefore, think long-term. Even in a well performing market experiencing double-digit gain, don’t count on quick short-term gains in appreciation.

Furthermore, with few rare exceptions, always buy investment property with a positive cash-flow. Remember the higher, the better, as your cash-on-cash return is directly related to the before-tax cash-flow from your property.

The selection of the real estate market must align with your investment goals. This is important as most investors begin by analysing properties without taking the location into consideration. This could be a big mistake.

Last but not least, diversification of investments across markets will be a good idea. Concentrate on one market at a time, investing in 3 to 5 income properties per market. After this, you could diversify into another promising market.