Investing in real estate is the current rage with people involved in the Carlton Sheets program spending money on courses to find out how they can make money without investing in real estate. This article hopes to help you create a sort of mental picture of five key principles that can help you make more money in real estate today.

Principle #1- Money is made in the purchase

Real estate investing is like stock value investing and you want to buy the real estate during a period of real estate recession. The reason for this is so that you can get some great capital appreciation when the real estate market heats up again.

Spending time on real estate valuation is critical, because if you can’t make sure the math is a viable proposition, there’s no way your real estate investment is going to be a good one.

Principle #2- Monitor cash flow

Investing in real estate usually has a monthly rental income that is then used to pay for mortgage payments and other problems with the building, such as a leak in the roof. Therefore, you should keep a close eye on interest rate hikes, as they can erode any calculated return on investment quite quickly. Once you have enough cash, it is suggested that you put some of it away in an emergency fund in case some of the rental tenants don’t renovate your property and then take the rest and consider investing in another real estate investment property.

Principle #3- Take advantage of other people’s time

Remember that no one can do it all, so the key is to focus on what you do best. If your strength is in negotiating deals, spend time looking for properties and then have professionals and contractors handle the rest of the deal for you. Similarly, if you are good at decorating properties, find deals and focus on the interior design of the property. By concentrating on what you do best and having other people do the rest of the work, you are making the most of your time and can earn more money with each new real estate investment you make. Spend your time building your team of advisors and employees working for you and you’ll see your profits begin to rise. Remember that by rewarding them financially, you will gain a dedicated group of people who will help you make more money from your real estate investment.

Principle #4: Learn to use leverage with a good rainy day cash balance

Did you know that many real estate investors started with very little money to invest? Even big real estate developers like Donald Trump have learned the power of leverage when investing in real estate deals. He wants to take as much as he can so that he can control property that is worth many times more than what he owns. However, remember to keep an emergency fund that contains a portion of your rental payments so that you can protect yourself against a possible period when unit occupancy in your investment property is low. Leverage, when used well, can make you a lot of money, but if mismanaged, it will bankrupt you. Therefore, planning your cash flow and learning how to use debt is essential before beginning a serious real estate investment.

Principle #5: Spend time networking with real estate professionals

Do you want the latest real estate investment offers? The best way to learn from them is to join the local group of real estate professionals and become friends with them. Learn some real estate investment lingo and spend time becoming friends with them because they are your eyes and ears on the ground and can tell you about recent developments and changes in rent, property, and infrastructure for your geographic location. Having first-mover advantage is what many great real estate investors have and by spending time networking with real estate brokers, you will substantially close the gap.

In conclusion, take the time to look at these five principles and determine how they can be applied to your real estate investing and you could start to see an increase in your real estate income.

By Joel Teo 2006 All rights reserved