Investing Guide

Investing Process

When you think about buying real estate, the first thing that probably comes to mind is your home. But physical property can play a part in a portfolio too, especially as a hedge against the stock market. Simply stated, when investing in real estate, the goal is to put money to work today and allow it to increase so that you have more money in the future. The profit, or "return", you make on your real estate investments must be enough to cover the risk you take, taxes you pay, and the costs of owning the real estate investment such as utilities, regular maintenance, and insurance.

Real estate investing really can be as conceptually simple as playing monopoly when you understand the basic factors of the investment, economics, and risk. In order to win, you buy properties, avoid bankruptcy, and generate rent so that you can buy even more properties. However, keep in mind that "simple" doesn't mean "easy". If you make a mistake, consequences can range from minor inconveniences to major disasters. You could even find yourself broke or worse.

As you can imagine, understanding your timing in the real estate cycle is critical to achieving big returns on investment and your decision process on where to invest. There are many other strategic objectives, like picking winning markets, purchasing properties, increasing value by improving the property, choosing a timeline that works for you and more, but first, you need to understand the cycle.

Visualizing the cycle in its entirety is the easiest way to grasp its predictability. But in order to see the pattern you have to zoom way out, because one pulse of a property takes 12 to 15 years.