Real estate investment is one of the highest-paying income-generating machines that many people are after. Although real estate can come high or low, it will still be in demand as more and more people look for a real estate property.
Real estate investors bidding against each other. Image courtesy of Fog City Journal
In an article posted on Bitcoin Revolution, being a real estate investor can either make
or break your path to financial freedom. You can benefit from your real estate
investments. However, if you don’t have self-control, you are risking your
financial stability. Imagine all the lost profits if you don't budget your money.
To avoid such an incident, it is essential for
you to learn how to control your personal finances. Some books and sites like MoneyTaskForce.com provide useful tips
to educate people on how to value their hard-earned money. Below are also some
tips that could help you deal with your financial struggles:
1. Create a Financial
Goal With Your Real Estate Investments
As mentioned, real estate investments are a
good source of income. You can be the landlord of an apartment or the owner of
the commercial spaces and other properties that you rent out. You can also buy,
develop, and sell real estate properties.
But whatever real estate you invest in, you
should have well-defined financial goals. For you to easily achieve your goals,
follow the SMART principle:
Specific - if your goal is to
gain profits from your rental units, then you should
define it clearly. You must be specific on how much you want to earn through
your real estate investments, especially when it's your full-time career. For instance, instead of being too
broad on the profits, you can indicate a specific target amount for your rental
units on a monthly basis.
Measurable - your goal must be
easily tracked. So if you want to earn USD 25,000 monthly from your 5-unit
rental apartment, then you must set a rental fee of USD 7,000 each unit if the
expenses will take USD 2,000 for each room.
Achievable - define a goal that
you can achieve and how you can achieve it. It's achievable if you or other
people have done it before. For instance, you have to ensure that all rooms are
occupied if you want a higher income.
Realistic - if your goal seems
impossible to reach, then you might need to adjust it. If you feel that it will
become more of a burden than an achievement, it means it would be difficult to
attain it. Consider the location of your property or its nearby infrastructures.
You'll probably get more tenants or buyers if the property has a good location.
Timely - a goal without a
deadline may keep your budget exhausted. If you're building a commercial space,
you must set a timeline for it to be finished and ready to be occupied. This
way, you'll avoid overspending while maximizing your profits.
2. Create a Separate
Budget for Personal and Investment Purposes
After setting up your goals, you'll know how
much you need to produce from your real estate investments. However, you must
also create a separate budget for your personal finances to avoid spending your
real estate investment profits for personal use.
Also, creating a budget for your real estate
investment will help you monitor your progress towards achieving your financial
goal. Here's how you can create a budget for your real estate investment:
List down all the start-up costs you've used in investing in
real estate properties. Specify the expenses and indicate the source of
funding.
You should come up with a contingency plan on how you can cover
up more months without gaining from your real estate investment. Maybe you can
look into some of the best side hustles to provide for your expenses for a few months.
Also, enumerate all your actual monthly expenses and operational
costs. For instance, car expenses for meeting clients, traveling to and from
the properties, and the like. This tip will let you know how much you need to
pay for your assets and liabilities so you would avoid spending from your
personal pocket.
3. Invest Your
Earnings and Let Your Money Roll
Even if your real estate investment is
thriving, it must not end there. You can let your money roll by investing in
other businesses. Find out other means to help grow your money.
Based on your goals, check whether your
profits are what you've projected. If yes, then continue with what you've
started. But if it's way below your profit goals, think of other ways to let
your earnings roll.
Don't stop when you're not halfway through
your financial goals with real estate investments. Instead, invest your
earnings to the following to increase your profits:
Buy More Properties - Search for
properties that are sold cheaply online or at your place. Choose the ones that
are directly sold by the owner as they don't have a broker or finder's fees. You
can also buy properties that are outside the city because the prices are
cheaper than those in the metropolitan areas. Redevelop the properties, then
sell it at a higher rate or rent it out for longer profits.
Invest in REITs - If you want to make
a passive income without the hassle of owning and maintaining properties, REITs
are the answer. Real estate investment trusts or REITs allow you to invest your
money so real estate property owners can use it to manage, develop, and
purchase more properties. You'll get dividends as a form of profits from this
type of investment.
Trade REITs - If you want to
manage your money through REITs personally, you can buy and sell REIT shares.
You can hire an online broker or brokerage firm to trade your shares.
Conclusion:
Without managing your money from your real
estate investments properly, you'll end up losing all the hard work of starting
your investment. And if you think that it’s hard to manage your profits from
real estate investment, you should start planning now and challenge yourself to
stick to your plan. Without trying, you’ll never know how to manage your real
estate investments.
I never focused on investing and wasting time and money. This article Crisp and clear and it enlightens me. Thank you very much.