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by Robert L. Cain, Copyright 2000 Cain Publications, Inc. Were they right? What did you have in mind for that property, anyway? That's a question few rental property investors ask themselves. Why is that important? It costs you money if you don't know where you want to go with your investments. After all, how will you know if you get there, or even if there is a "there" to get to, without planning the result you want? The real estate mega-investors, the ones who buy the 1000-unit apartment complexes and 30-story office towers, know exactly what their investment goals are before they even make an offer on a property. They are looking for specific, measurable results: increase in value, tax savings, and/or any number of other goals related to putting lots of dollar bills in the bank. That concept is the number one secret to making a profit on investments. On the other hand when many smaller-scale landlords finally close on a rental property, their reaction is too often "Whew, I got it." Then they go to work finding tenants and/or managing the property and, in the process, get so tied up in the day-to-day operation and the resultant problems and headaches of the property that the bigger picture gets lost. Their rental property turns into a chore, a duty, a cross to bear, but certainly not an investment. How can you make sure your real estate investments will accomplish the goals you had in mind for yourself? Here's what I am going to ask you to do: figure out what the big picture is for your properties. Take a sheet of paper and divide it into three columns. In the first column write the addresses of each of your rental properties. In the second column, opposite the address of the property write why you bought it. If you don't know why, leave it blank. But even if you changed your mind about why you bought it, write it down anyway–after all, plans and goals do change. In the third column decide and write when you are going to sell it or trade up for another investment property, or throw another loan on it to get cash for more investments. That figure could be a time-period, such as five, ten or twenty years, or it could be a dollar or percentage figure, such as "when it's worth $XX" or "when it increases XX% in value." There's an old saying: "Obstacles are what you see when you take your mind off your goals." If you don't know what your goals are for your investment properties, the day-to-day management obstacles seem nearly insurmountable and can drive you right out of the rental property business. Conversely, if you know what your investment goals are, if you know what you are going to do with your properties, if you know why you bought them, the day-to-day problems become infinitely easier to deal with. You take care of them and take the steps necessary to see that those problems don't occur again. That accomplished, you can concentrate on making money, not making mountains out of management molehills. Landlords have every reason to be proud, they are part of a small percentage of the population that has taken charge of their financial lives. Take even greater charge of your life and write down what you have in mind for your properties. |