So you’re interested in real estate investing. You have come to the right place! The team behind the Real Estate Financial Planner™ wants to help you achieve your goals, with valuable information and advice from start to finish. Let's start with a real estate investment plan!
In today’s post, we’re talking about how to create your plan. Real estate investing comes with significant risks — and rewards — and having a plan is how you set yourself up for success. Keep reading to learn how to build a great real estate investment plan, and explore our site to find more resources and classes to help you close the deal!
Create a Goal
Your first step in creating an effective real estate investment plan is to determine what your goal is. Why are you interested in real estate investing? What do you hope to get out of your investments? It’s hard — if not impossible — to create a plan if you don’t know what you want to accomplish. It’s like asking someone for directions without knowing where you want to go!
Financial freedom or early retirement is the driving force behind many people interested in investing. Many of the investors who work with us say they want to build wealth, spend more time with their friends and family, travel more, or pay their bills with passive income.
All these can be great starting places to help you decide what your goal is, but keep in mind that you have to drill down. If you want to find success in real estate investment, you need something that will keep you motivated to work hard, as well as a specific goal that you can track.
Pick a Number
The quick-and-easy answers we hear in our real estate investing classes sound good, but often just scratch the surface. Many investors say they want to achieve financial independence, but what does that really mean? It will be different for each person. Do you need a certain amount of income to cover your bills? Are you aiming to have a specific amount of cash in your bank account set aside for your retirement?
Whether you’re hoping for $5,000 or $5 million, you should have that number in mind as you move forward. You need a target so you can decide how you want to get there. Plus, if you have a concrete goal in mind, it’s much easier to track your progress over time and see how your investments are bringing you closer to achieving your dream.
Create a Plan
Now it’s time to figure out how you’re going to reach that goal you just put into writing. (You did put it into writing, right?) Not only should you know how you want your circumstances to change, but you should also have a clear understanding of your starting point. Go through a financial check-up so you know what you can afford, set a budget, and check your progress each quarter. Resources like Mint or Personal Capital can help you, or you can build your own spreadsheet.
Your plan is just one way to achieve your goals, and it should be flexible, but that doesn’t mean you should alter your plan on a whim. With all the different real estate investment strategies, it can be tempting to chase trends and success. Starting your journey as a Nomad™ investor doesn’t mean you have to end as Nomad, but it does mean you shouldn’t change your mind and pursue a fix-and-flip strategy within the first week or two because another investor you know made a lot of money. Stick to your guns! At least until you can make an informed decision that something needs to change.
Be Willing to Adapt
That being said, don’t be afraid to adapt your plan to changes in the market or in your personal situation. Your plan is a set of guidelines, not rules written in stone. It may turn out that while you were passionate about wholesaling homes, a buy-and-hold investment strategy works better for your lifestyle. A lot can happen, especially over the span of decades.
Last but not least, have a firm understanding of your “why.” Finding success in real estate investing can mean getting up early and staying up late to close deals and manage your properties. If you don’t have a passion for your plan and a drive to see your goal become a reality, then you will likely burn out in a few years and quit just before you can enjoy the fruits of your labor. Why do you want to make more money? Why do you want to quit your job or retire early? If the answer doesn’t give you chills, keep digging until you find a reason that will help you keep going when the going gets tough.
The Real Estate Financial Planner™ team is here to do more than help you prep for success — we’ll help you find it. Learn more about every step of real estate investing with our library of more than a hundred classes, and model your investments — including stocks, bonds, and more — in our software for a better understanding of your future. Take a deep dive into our resources today to get started!