8 Principles of Real Estate Investing
By Patrick Francey
How is it that for some people having success in real estate investing just seems so darn easy, while others never seem to achieve the success they expect or they struggle to even get started?
At REIN, you are more than just a Member of our community and a user of our services; we think of you as a partner. In life, you wouldn t choose a partner without knowing his or her philosophy on love, children, sports allegiances, or any number of important issues. The same goes for education in real estate investing.
You don t blindly hand your money to anyone claiming they ll help you make a fortune. Before you part with your cash, you want to understand their processes, practices, and what they stand for. REIN Members want the assurance that they are not just handing their money over hoping for a valuable education in real estate investing. You want to understand our processes and practices, our methodology and beliefs. You want to know what we do, how we do it, and why.
From the beginning, REIN has stood by our core principles of investing in real estate principles that have stood a 21+ year test of time, and have supported our Members in transacting over 37,000 properties worth more than $4.2B.
As a REIN Member we want you, as our partner, to experience great success as an investor. As educators we have immense pride in guiding you to build a profitable real estate investment portfolio. These are the core principles behind our successful approach for our Members and real estate investors:
Principle 1: Invest in real estate, don t speculate in real estate
This one is straight from the mouth of bestselling author and a founding partner of REIN, Don R. Campbell. Don has built his family s wealth and ensured their financial certainty by applying the very same proven strategies and philosophies that he and the REIN team teach. We re not interested in trying to define value from historical real estate charts and national averages, and we don t blindly invest in a hot project. We prefer to invest our money in regions and cities where the economic fundamentals support real estate values over the long term – well in to the future.
Principle 2: Buy for cash flow
We re long-term buy and hold investors, and we view our long-term perspective as the biggest edge we have over short-sighted hype or doom and gloom headlines and forecasts. However, we don t just buy our real estate and forget about it. We keep a close eye on our property, work with our property manager, follow the news, study the key economic fundamental drivers, and strive to learn more about the region s market. We pay close attention and work to maximize our rents and ultimately our profits.
Principle 3: Fish where others aren t
We re not interested in following the crowds. We are interested in thinking for ourselves, doing our own research and analysis, and making our own decisions. This includes, as Warren Buffett wisely advises, being greedy when others are fearful, and employing contrarian real estate investment strategies. It also means becoming a geographic specialist, with a laser beam focus on the best region in which to invest. Savvy investors understand the economic ups and downs of a region and let the economic fundamentals be the guide, not the hype of speculators. Looking for houses in different locations also means going to auctions and being competitive with other buyers for the best properties, for example, if you were looking to invest in North Carolina you would use something like Carolina Auction And Realty to find the right fit for you.
Principle 4: Check your emotions at the door
We recognize that real estate prices and rents can fluctuate for a variety of reasons but these movements don t happen daily. As investors we must manage temperament and not let our emotions affect our decisions. By staying grounded in the economic fundamental realities that impact real estate today and into the future, the short term doom and gloom is far more likely to show up as a buying opportunity rather than a sell out.
Principle 5: Keep score have a goal
Always do your analysis and math based on your goals and your exit strategy. Buying real estate for cash flow with a view to the long term future, gives you the window of opportunity to manage and track results. Set your goal and work backwards from your intended outcome. Always track your results to ensure your plan is working, and be open and prepared to put in small corrections along the way!
Principle 6: Put your money to work
The power of leverage when used wisely makes your money worker harder than you work for your money. The power of appreciation, mortgage buy down, and cash flow combined with rental income exponentially maximizes your investment of the down payment. Add to that your geographic specialization and focus, and you ll experience how hard your money can work for you.
Principle 7: Believe in yourself
People are conditioned to believe that investing in real estate is really hard work and too difficult for the average Joe Investor and that real estate investing and money issues are best left to the professionals. But we believe you can do it as well or better than even the most seasoned real investor and you should have fun along the way. The philosophy, education, analysis, research and leadership of REIN helps you get there. Know WHY you are investing, what results you want to achieve, and know when to stop.
Principle 8: Surround yourself with likeminded people
Robert G. Allen once said, Don’t let the opinions of the average man sway you. Dream and he thinks you’re crazy. Succeed, and he thinks you’re lucky. Acquire wealth, and he thinks you’re greedy. Pay no attention. He simply doesn’t understand.
Sadly, this quote is so very often true for individuals who are focused on achieving their dreams and goals. REIN is a community of individuals who share a common vision for success, aspire to achieve great things, and engage in supporting others to succeed.
There you have it: The eight keys to investing the REIN way. Though we all subscribe to the benefits of the eight principles, we are investors first; our styles and approaches do differ from each other when it comes down to the different strategies of investing in real estate. This comprehensiveness means that REIN Members can tap into this wealth and learn an approach to building long term sustainable worth that suits them.
Patrick Francey, is the CEO of REIN. As a serial entrepreneur he owns many businesses and has been a real estate investor for nearly 20 years. The majority of his holdings are located in Edmonton and Grande Prairie. Reach Patrick at [email protected].