subject: The Number One Mistake Real Estate Investors Make In Long-term Real Estate Investing [print this page] Long-term real estate investing has been around since the beginning of recorded history. Thousands of years ago, the ancient Egyptians invested in extended areas of attractive burial grounds and built amazing tombs that could be either used by a family or sold for a profit in an emergency, and even that was probably not the beginning of real estate investing. As you can see, the idea that real estate could be used for security in the future is not a new one.
However, while the principle behind long-term real estate investing is simple since property tends to appreciate over time, holding it will nearly always result in a profit when it is sold there is a huge mistake that nearly every long-term real estate investor makes at some point in their career or another. In some cases, it ends up not mattering, but in these cases those investors got lucky and that is the long and short of it. And today, if you make this mistake you are 99.9 percent certain to take a loss on your long-term real estate investment.
You have to plan your exit strategies.
Just because you are holding a property does not mean you do not need a parachute in case that deal goes bad. Ideally, you will keep your long-term investment for 10 to 30 years, and then sell it for a huge profit. However, what if you need money sooner, or something happens and you cannot afford the monthly payments? How will you know when the optimum time to sell comes along? The answer to all these questions is simple: you develop an exit strategy.
When you invest in a property, you need to be able to visualize the life of that investment. Determine how you will pay for it. Do you have the money saved or is it in your reliable monthly budget? Will you install renters, and how long can you go without them before you are in trouble? If worst comes to worst and you just have to get rid of it, how will you do so? Are you prepared to negotiate a short-sale or a subject-to transaction? Are these even an option with this property? And lastly, how will you know when its time to sell? Will you take a really great offer if it means selling early? Do you have a deadline for when you want or have to sell for example, will you take a great offer at 15 years so that you are out of the property by 20 years, or would you rather not even consider anything until after two decades?
All of these are questions that will help shape your exit strategies for your long-term real estate investment so that regardless of the economy, when your time comes to generate wealth or income off that investment, you are prepared to do so. Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit www.CoachingByPeter.com.
by: peter V
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