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The Four Pillars of Real Estate Investing

GoRentFreeFast

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Over the last couple of months I’ve been asked so many times I’ve lost count to reiterate the ‘Four Pillars of Real Estate Investing’ rules that I speak of in our information sessions that I’m going to simply post them for everyone’s consumption.

First however I will make this small disclaimer: These are the rules I’ve used over the last 6 years to ensure the return, security and ultimately the happiness for our Lease-To-Own investors. They do not depict the all time global rules for everyone’s methods or techniques however I believe they would be an excellent starting point!

The ‘Four Pillars of Real Estate Investing’ are:

1. You must have an excellent, sustainable ROI year over year. (As an example we typically return 45%+ year over year cash on cash)

2. Positive Monthly cash flow.

3. Security...BE ON TITLE and have the ability to remove bad occupants within 30days!

4. And the one EVERYONE forgets...Passive investments. If you’re like 95% of our investors you have a job and family so you simply want money flowing into your account every month and not be unplugging toilets at 2am or paying for someone else to do it!

Hope you found these helpful and become the starting blocks for your own rules or guidelines to continued successful real estate investing.

I always enjoy speaking to other investors (or soon to be RE investors) so don’t hesitate to drop me a note.

Philip
 

Thomas Beyer

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2 more pillars .. or why did you not state them ?appreciation, through time, inflation, value improvement and/or re-positioning (i.e. divide duplex into 2 condos, or old warehouse into 12 lofts) ?

mortgage paydown
.. as this is how you build equity even with no cash-flow and no appreciation !
 

GoRentFreeFast

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QUOTE (thomasbeyer2000 @ Oct 4 2009, 09:32 PM) 2 more pillars .. or why did you not state them ?appreciation, through time, inflation, value improvement and/or re-positioning (i.e. divide duplex into 2 condos, or old warehouse into 12 lofts) ?

mortgage paydown
.. as this is how you build equity even with no cash-flow and no appreciation !


Hi Thomas,
Appreciation is usually covered under ROI (Clearly!) and paydown is covered within monthly cash flow...

Thanks for the input.

Philip
 

Thomas Beyer

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QUOTE (GoRentFreeFast @ Oct 5 2009, 04:08 AM) Appreciation is usually covered under ROI (Clearly!) and paydown is covered within monthly cash flow...
not quite .. as your ROI stated cash-on-cash ! .. mortgage paydown is not (yet) cash. It is equity increase that has to be turned into cash at some future date !

cash-flow might be 0 .. or sometimes negative .. and still: you can make money as you pay down the mortgage !

Thus: your definitions / your four pillars have to be more precisely defined !
 

GoRentFreeFast

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QUOTE (thomasbeyer2000 @ Oct 5 2009, 11:50 AM) not quite .. as your ROI stated cash-on-cash ! .. mortgage paydown is not (yet) cash. It is equity increase that has to be turned into cash at some future date !

cash-flow might be 0 .. or sometimes negative .. and still: you can make money as you pay down the mortgage !

Thus: your definitions / your four pillars have to be more precisely defined !


For a point of reference our typical positive monthly cash flow is $400-$700 for each property.

My original post was intended to assist investors by providing guidelines which have proven successful for our current 6,000 LTO investors however it seems this has turned into a definition of terms debate...More than happy to share our pro forma Thomas so we can be on the same page...Helping each other...
 

GoRentFreeFast

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QUOTE (DOZAH @ Oct 5 2009, 10:52 PM) i`d love to see a sample proforma


Happy to. Anyone wanting live copies of current ROI sheets etc. please email me at [email protected]

Philip
 
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