Olebulls Real Estate Investing – part 2

Welcome back to my real estate overview! In part 1 of my real estate overview, we touched on topics like the importance of creating goals, whether you see yourself as an entrepreneur or intrapreneur and how it is to be a real estate investor in the very beginning. Note that my coming articles should work as simple guides that will give you a portion of knowledge around real estate investing. Part 1 of my real estate articles can be read here: Part 1. The articles will be written as chapters and will eventually take the form of a small book that will deal with everything from being a real estate investor in the starting pit, to eventually capitalize on the latter on the journey to become a wealthy real estate investor.

A plan

In everything you do, if you want to be successful, a plan is very important to have when chasing your goal. It helps you establish priorities for yourself so that you do not fall of your track on your way to achieving your goal. It defines your view of success and it focus on the activities that can make your goal/dream a reality. The strategy behind this will help you know which tasks that you need to focus on and in which order to complete them. The latter is very important, you can’t buy real estate if you have no money, therefor you need to find a way to get money first. You know, successful investors are the ones that made a plan and took control over their own financial success. They solely achieved this through a thorough plan which were focusing on creating accumulated cash flow from different real estate units over time.

The first step is really to write down your goals and clear milestones along the way. The key here is how you specify your goals and milestones. Do not just write down a number, for instance I want to have 5 million dollars within 20 years. That is hard to chase… To make a winning plan you really need to deep dive into the mathematics and figure out where your lifestyle would be in 20 years. Do you need $5000 dollar a month? or maybe $10 000 a month to make a living? Whatever you decide the number will be your calculations need to be thorough. When you have done the math behind you can write down your milestones (the hard part begins). Here your salary won’t be enough unfortunately (maybe you could succeed with only saving an amount of your salary each month, but then you would need to sacrifice a great deal of enjoyable things that makes your life happy – I would not suggest that), you need to find investments and put your money to work so that you get equity even faster so that you can buy units in a higher phase. Point being, you need to find out what you can take advantage of to escalate your investment in real estate. What about taking advantage of Hive and its vast amounts of Dapps that are growing every month? Just to mention a great opportunity. Or you could try to find small cheap studio apartments in the start and make sure that the cash flow generated exceeds the cost of the loans connected to the studio apartment.

Let’s say your goal is to buy 1 unit a year for 10 years. Then you eventually end up with 10 studio apartments where most likely 1-3 of them are dept free. Then you have started to gain a lot of insurance and can take up even more loan to escalate your investments. When you see yourself in this position it will become much easier to “play the game” of real estate investing.

Do not combine private and professional investments!

Professional real estate investments with an associated risk profile should preferably be made separately from your own private economy (since you probably have a family and do not want your mistaken investments tearing down your family). Too many people are lured by the opportunity to be able to use private equity capacity for professional investments. You then put your house and cottage at risk without considering the extra risk this poses to you. Most people who make real estate investments do this to make money. But the outline has either an upside or a downside.

If you provide security in your own home for your investments, and these end up disabled, you as the owner are exposed to an extra risk that should have been isolated. Keep your private investment separate from your professional investments. It is mainly in the “starting pit” that this is most relevant if you should not be able to provide sufficient equity to ensure the bank's total requirements. It may therefore be wise to invest in a suitable object that over time can serve as a side security for later investments in real estate. If you can refer to a commercial property that has a positive cash flow, and that has available borrowing capacity, this should be offered as security. If the bank insists that you still need to provide security in your own home, you should say no - try another source of funding. Furthermore, it may make sense to set up a holding company that owns the professional investments as you grow your business. This is an easy way to keep your private and professional investments separate. However, creating a holding company should be done after you own 5 units that create cash flow (this is because of different tax advantages).

Resource planning

The prospect of managing your own investments and your own time can seem tempting to many that love real estate investments. At the same time, there are some downsides here. While this may seem paradoxical, it is easy to be tempted to spend all your time looking for real estate investments - with the attendant risk of stretching your finances too far, precisely because you see a world of possibilities. At this point, many have gone bankrupt (Hint: 2007). Demanding business requires time and businesses that are burning from different angles will overthrow your equity effectively. By this I mean that you should consider having available time and resources to deal with all that is unforeseen. If you do not have available resources in unforeseen times, you may be paving the way for others to take over your real estate at a discounted price.

This is it for now as I will keep my real estate chapters to approx. 1000 words. Stay tuned for the next chapters of real estate investing. There will be some chapters that I hope and believe that you can take with you on your journey to becoming a wealthy real estate investor.

Thank you for reading!

Cheers -Olebulls

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