Thanks for checking out the Real Estate Today Podcast. We continue our series on cash flow properties. Today we talk about defining your plan.
Bob Nelson: I’m Bob Nelson, real estate investment broker with Pacwest Real Estate Investments. I’ve been dealing in the past several shows with the fundamentals of investing in cash flow real estate, passive investment real estate. For those of you that say, “Hey, wait a minute. I don’t need the fundamentals. I’m already there.” Who’s going to be your backup when you’re on the wrong side of the daisies? I’d be willing to bet the next generation down doesn’t have any, most or any of the information in their mind that you had when you created this thing. As I go through this, this is a great time to think in terms of who’s my back up on this thing. Educate them. Bring them up to where you are, just in case you’re accidentally not there, someday. We’re all going to be there at some point in time. Nobody’s getting out of this sucker alive.
Let’s take a look then. Again I suggest that it’s a great time to become pre-qualified with a mortgage lender, a lender that would make the mortgage loan on the type of property that you’re looking to acquire. Also take a quick look at the property management side. Who’s going to manage whatever you’re going to be doing? The huge mistake that’s made by a whole bunch of passive investors as they get started or as they move up the food chain, they buy the property and they also buy themselves a property management job. I would really recommend that you consider professional management. Yes, they charge something, but I’d be willing to bet they get more out of the property after their expense than you’re going to do on your own. They aren’t going to say and they’re not going to grumble etc., etc. like you are if you have a tenant issue.
Getting started requires a written plan. Notice the term “written.” Everybody’s got a game plan, but unfortunately it changes if there’s a football game on or there’s something that has to be done or a weekend project. Now write it down. Have a solid game plan written down. This requires a certain amount of long-term focused energy. Again define the purpose of your investing. Define your probable holding period. How long are you going to hold this next asset? Most of you say, “Well, I’m going to hold it forever.” No, you won’t. You will not do that, I’d be willing to bet. You’re going to come to a point where you’re going to say, “Hey, wait a minute. I’ve got a huge amount of equity in this thing. If I could move up the food chain into a different type of property or a larger property, I’m going to do it.” That’s okay. There’s no problem. That’s part of the natural process.
I’m Bob Nelson, real estate investment broker with Pacwest Real Estate Investments.
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