Someone asked me the other day, “What is the most important thing thing to do when you invest in real etstate?” My answer came out pretty quickly. It is…. make sure you know your profits before you buy! You do this by running the numbers. This is not as easy as it sound because it means that you may have to run the numbers on 25, 35 ,50 or more properties before you find one that make financial sense.

Most smaller properties don’t cash flow because the investor is trying to buy it for such a little amount down and the income won’t support the loan payments. The solution to this is, put more down, get the payment on the loan to be smaller or DON”T BUY THAT PROPERTY!

I just got back From Phoenix last night and I had to post this. The Real Estate Market has slowed. There are three times more properties for sale this time of year as compared to last year. The rental market is starting to experience a shortage of rentals. What does all this mean? It means that pressure will be put on rents and the rental market has hit the bottom of the soft cycle. Rents are going up! Now I know you might be saying…I’m not from Phoenix, so what does this have to do with me. Well, this is just one sign of the market is turning in many areas and if you market hasn’t turned yet..it will!

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There are only four reasons to invest in real estate. They are cash flow, loan payoff (also called principal reduction or equity buildup), tax savings and appreciation. In my opinion that biggest is cash flow. Here’s why….loan payoff is good, but it doesn’t give you any cash today……tax laws will change and you may not get any tax savings in the future and…… appreciation is iffy, who knows if the value will keep going up and even if it does you can’t eat equity. Therefore, if you can get cash flow, the other benefits are just gravy on top.

In all my years of teaching new real estate investors about buying rentals, the most common question that comes up is….. Where Do I Get The Money To Get Started?

They are asking this question because, in most cases, they don’t have enough money to feel they can get started.

Well, here’s my short answer to that question. In most cases YOU DO NEED MONEY to buy real estate. The key to this is that it doesn’t have to be your money, it just has to be a source that will give you the money to buy the real estate.

Here are a few example of sources of money that may of may not work for you:

>> Borrow from friends and relatives – agree to secure by real estate and pay them interest or give them part ownership
>> Use cash advance feature from a charge card – make sure you can afford to pay back the high interest from the cash flow of the proerty or some other source.
>> Save to buy – you should get in the habit of saving money to invest
>> Find out about creative lending programs – most traditional lenders have many programs aimed at investors to buy real estate. Get on the phone and start to make calls to find out their programs.
>> Sell some of your stuff – with Ebay, it’s is relatively easy to sell things that you may have around the house that you no longer want or use. Turn into cash.
>>Run an ad to find investors. With banks paying an all time low interest rate on money, there are many people that would be willing to lend you the money secured by real estate if you paid them a favorable rate.
>>Find a good deal, Buy it on contract and then sell the contract to buy to someone else to make a profit.
>> Get Creative. Think of it this way. If you absolutely has to raise money in a short period of time what would you do.

The bottom line is this. To get started you have to make the decision that you are going to do this. Then you start focusing on what your sources of money currently are and then expand on that, you’ll find that the money is plenty of money out there.

The key to get it in your hands is to ask for it in exchange for something that you offer them.

In conclusion, if you want something, find someelse who has it and ask them how they could help you get it. The worst that will happen is that they wil say no. They best is that they will say yes or give you ideas on how to get it.