Real Estate: The 8 Fundamental Principles in Investing

How is it that for some people who are successful in real estate investing they make it so easy, while others never seem to achieve the success they hope for or are struggling to even get started? In this article, we will focus on knowing the principles of investing in real estate.

These are the basic principles behind our approach as Real Estate investors:

Principle 1: Invest in Real Estate, Don’t Speculate in Real Estate
We prefer to invest our money in the regions and cities where economic fundamentals support long-term real estate values - lasting into the future. We do not invest in areas or projects that are fashionable.

Principle 2: Buy for Cash Flow
We buy long-term and hold investments and see our long-term outlook, as it is the biggest advantage we have over myopic hype or pessimistic headlines and forecasts. However, we don’t just buy real estate and then forget about it. We keep a close eye on our property, work with our farm manager, follow the news, study key economic fundamentals, and try to get more information on the market in the area. We pay a lot of attention and work to maximize our income and ultimately our profits.

Principle 3: ‘Fish’ where others are not We are not interested in following the crowds. We are interested in thinking for ourselves, doing our own research and analysis, and making our own decisions.

Principle 4: Leave Your Emotions at the Door
We recognize that rental and home prices can fluctuate for a variety of reasons – but these movements don’t happen every day. As investors, we must manage our temperament and not let our emotions affect our decisions. Being based on the fundamental economic realities affecting real estate today and in the future, short-term sadness is much more likely to appear as a purchase opportunity rather than a sale.

Principle 5: Keep Score… Have a Goal
Always do your analysis and math based on your goals and your exit strategy. Buying real estate by cash flow, looking to the long-term future gives you the opportunity to manage and track results. Set your goal and work backward from your intended result. Always track your results to make sure your plan is working, and you are open and willing to make small corrections along the way!

Principle 6: Put your money to work
The power of leverage when used wisely makes your money work harder than you work for your money. The power of appreciation, mortgage payment, and cash flow combined with rental income exponentially maximize your down payment investment. Add to all this your geographic specialization and focus, and you will experience how hard your money can work for you.

Principle 7: Believe in yourself
People are conditioned to believe that real estate investing is really hard work and too difficult for the average investor – and that real estate investment and money issues are best left to the professionals. But we think you can do as well or better than even the most seasoned real estate investor – and you should have fun along the way. Philosophy, education, analysis, research, and leadership help get to that point. Know why you are investing, the results you want to achieve, and know when to stop.

Principle 8: Surround yourself with like-minded people
A wise man once said, “Don’t let the opinions of the average man convince you. Dream and he thinks you are crazy. Be successful, and he thinks you are lucky. Acquire wealth, and he thinks you are greedy. Pay no attention to it. He just doesn’t understand.

Sadly, this quote is very often true for people who are focused on achieving their dreams and goals.

There you have it: The eight keys to investing the way real estate. Although we all subscribe to the benefits of the eight principles, we are investors first; Our styles and approaches differ from each other when it comes to different real estate investment strategies. This breadth means that those who follow us can tap into this wealth and learn an approach to long-term sustainable wealth building.