- Real Estate
Is Real Estate Investment the Right Job for Me?
Questions Prospective Investors Must Ask Themselves...
1. How Long Am I Prepared To Do This For?
Property investment is not property speculation where you take un calculated risks over a relatively short term; all your decisions must be based on logic, insight and forward planning and with a long term view in mind. Once begun you will not be able to change your mind in a hurry. Everything concerning property takes a long time to sort out. You must never be impatient with your real estate investments if they don't bring in the returns you anticipted over a short space of time.
2. How Old Am I?
Mortgage lenders are often reluctant to lend beyond retirement age; don’t leave it too late. The younger you are, the better. Having to manage a property portfolio on a daily basis when you'd much rather be enjoying your later years is not an enviable situation to be in.
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3. Do I Have the Time For it?
If you already have a full time job you will not have the time to devote to your rental property business unless your spouse or another trusted person is prepared to take on the commitment of running the business round the clock. You can always enlist the help of an agency but there will still be pressure on you to fill in property related paperwork and attend to emails and phone calls. Giving up your day job is always an option but never do this unless your cash flow from property income is at the stage where you know you can easily live on it.
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4. Do I Have An Avid Interest In Everything And Anything Property Related?
If you don’t, you won’t have the kind of motivation that needs to be permanent. The impetus to make money is not enough – you need to develop a knowledgeable background concerning real estate and build on it. There is something new to be learned every single day and you will need to keep up with the constantly changing legislation that affects the property business.
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5. Do I Have Any Entrepreneurial Qualities Such As Determination, Persistence and the Desire to Do Something Positive With My Life?
These characteristics need to be paramount in your personality for you to build up a successful property portfolio. If you are the sort of person who likes to be your own boss then property investment will likely suit you but if you constantly seek direction from others it won't. You'll need to make decisions on a daily basis that could cost you dearly if you make the wrong one.
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6. Can I Accept Responsibility On A Grand Scale?
You must have a dedicated and responsible attitude and be willing to comply with current legislation. People will expect you to be a miracle worker at times and you will often get little praise for your efforts. Everyone will always expect you to sort things out even when it is not within your power to do. You will often come into contact with undesirable people in the shape of irate neighbours and irresponsible tenants but you will have to maintain the patience of a saint and treat then all politely even if they insult you and treat you unfairly.
7. Am I Prepared To Plough Profits Back Into the Business?
Spend your profits too early and you could be in for a nasty shock if your business has not yet had the time to establish itself. Don’t even consider giving yourself a hefty pay-cheque for a good number of years. Most businesses take several years to make any return and this may be even more applicable to one that concerns property. Houses eat up money at an alarming rate and you may even find there is no noticeable profit for a number of years.
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8. Do I Have Enough Financial Resources At My Disposal?
You can never have too much spare cash available when it comes to property. There are always the unexpected repairs and maintenance issues that can deplete your finances. Things like boiler replacements, roof repairs and void periods between tenancies are unforeseen and unavoidable so you must keep a reserve for this eventuality.
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9. Am I Fair And Honest In My Dealings With Others?
You need to be trustworthy and keep your promises but also be prepared for the fact that others may seldom possess the same values and principles. You will often be charged more for work on your properties purely because people will assume you are wealthy since you own several houses. This is totally ridiculous, you know - but others will not hold the same view.
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10. Am I Competent In Dealing With Problems Whenever They Arise?
Managerial skills and being organised yourself are a must.You will have to keep detailed records of everything that has been spent on your rental properties and will also need to keep records of the tenants that have lived there. You will need to be on hand 24/7 to sort out issues with neighbours and often unreasonable and illogical requests from tenants. You must never get angry or sentimental over anything but you must keep a level head and deal with all issues in a calm and sensible manner.
11. Do I Have the Right People On Hand Who Can Assist Me At Short Notice?
You will need to build up a good working relationship with tradesmen such as builders, plumbers, roofers and electricians who you can trust. Not forgetting white-collar workers such as bankers, solicitors and insurance reps. You thus need a portfolio of people to assist with your portfolio of properties!
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12. Do I Have the Ability to Cope With All the Paperwork That Owning Rental Properties Involves?
You will need to turn your spare room into an office and keep up to date records of just about everything pertaining to each property you own.
13. Am I a Good Judge Of Personality?
You will need to be a social worker one day and private detective or psychiatrist the next to cope with the day to day problems that you will be sure to encounter with your tenants.
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14. Am I Prepared to Learn From My Mistakes?
Not only will you have to learn from your mistakes but you must also have the capability of turning them round and changing then into successes. This may sometimes prove insurmountable and you may even get to the point where you regret ever becoming a property investor.
15. Do I Have At Least One Exit Strategy (other than jumping in the lake) If Things Go Badly wrong?
Selling a house is never as straightforward as buying and you may not be able to release your capital easily once you have turned it into bricks. Always have several contingency plans, be flexible and be prepared to change your strategies if they are clearly not advantageous to the smooth running of your property rental business. Putting all your money into property has its downside and you may find that you become 'asset rich, cash poor, as the old saying goes.'
After Reading This Article, Do You Think Being A Real Estate Investor Is The Right Job For You?
© 2015 Stella Kaye