asset itself. In other words, it may be easier to get invest in a multi-million dollar commercial complex than a single family home. Therefore, the larger investment actually poses less risk than the home.
Larger properties are also less risky because they have the ability to house more occupants. For example, when a home is leased out, it is 100 percent leased. In turn, when it is not leased, it is 100 percent vacant. However, when a 10-unit building is leased at 50 percent, there are tenants paying rent. Unlike its counterpart, you have more tenants to rely on and thus the risk factor is lowered.
Secret 3 – You Cannot Get Rich with “No Money Down”
Contrary to popular belief, you cannot get rich buying into the “no money down” philosophy. In reality, no money down is another way of saying “100 percent financed.” When someone finances 100 percent of an investment it calculates into high monthly payments and thus stops up cash flow. You don’t want that.
Take a moment here and note the terminology. Just because 100 percent financing is not a good idea, this doesn’t mean you have to fork over the down payment straight from your checking account. As you already know, you can utilize investors for upfront capital and down payments. In other words, “no money down” doesn’t necessarily mean what you originally thought it did.
Another common misconception is the idea that you can get rich quick by “flipping” houses. If you haven’t heard of this term yet, “flipping” entails purchasing a piece of property and then selling it for a higher price in a very short amount of time. The flipping concept works in certain markets. During the recent housing boom, homes were appreciating at such an enormous rate that investors were buying homes from builders and by the time the home was done – nine months later – the house was worth thousands more than the original loan. But in the real world, flipping isn’t a sound investment strategy. Sure some people pull it off, but it is not easy and it is definitely risky.
Secret 4 – The Magic Touch Is a Myth
While it’s an easy theory to buy into, there really is not such thing as the magic touch. You may see investors who are quite successful in the real estate market and think their profits are built upon luck, but that is simply not the case. The primary difference between successful investors and mediocre investors is vision. The successful investor, as I have already stated, knows the market and how to make decisions. This person can take everything they know about real estate and use that information to find gems in the market. Accurate vision is one of the keys to success. Without it, your odds of multiplying your wealth dwindle.
By utilizing common sense, investors gain a clear understanding of a property and the opportunities that come with it. For you, the question is, “how do I know my common sense is on track?” The answer to this question is actually simple. If you have a vision for a piece of property, share that idea with others. If you find your colleagues do not understand your concept, then perhaps you are off track. Keep this in mind, because if you are unable to sell your vision of the property, it is likely to be hard to sell the property. This will cost you money, and you don’t need to do that.
Secret 5 – You Don’t Have To Have Connections
Now before you jump to conclusions, don’t get me wrong. Having connections in the real estate industry is a definite plus when venturing into investing. However, you do not have to be connected to the market as you first enter the industry. Too many people believe that you have to know someone before you can break into investing. Don’t be one of these people.
The only thing that stands between you and success is you. You can know all the people in the world and still not be successful. This is a hard truth. Success comes from you directly. Not the people you know. Sure, friends and colleagues can be a major asset in your business, but if you don’t have any do not fear.