If You Fail To Plan… Plan To Fail –
Why Investment Plans Are Critical To An Investors Success
If you are a pilot you file a flight plan. Ship Captains Chart their course. River runners file a float plan while even Scuba Divers live by the saying “plan the dive and dive the plan”. These and many other examples of proper planning are part of everyday life and yet investments are often left to chance…
If you’ve ever taken part in a 1031 Exchange you will know the most difficult and vital part of any exchange is acquiring the next property, your “replacement” property. The time-worn adage, “You make your profit when you buy real estate”, is true. Anyone who acquires a replacement property without knowing what they are going to get out of it is at the mercy of chance.
PLAN FOR THE FUTURE
More sophisticated investors plan for the future. They know the profit they must earn to reach their investment goals. With this in mind, they calculate how much profit they will earn in the next investment, what they must do to earn that profit and when they will take their profit. They plan for the resale before they close escrow on the purchase of their replacement property.
A good investment plan will consider potential changes in the economy and the financial markets as well as trends and valuation methods. To a knowledgeable investor, being “stuck” in a property long after it has peaked may be a disaster.
WHAT YOU CAN DO
Although it is difficult, if not impossible, to emulate the methods used by successful investors, there are a few steps every investor can take to meet their investment objectives:
Develop an investment plan. Know what your investments must accomplish for you over your investment life.
Ask yourself how the proposed investment fits your plan. What profit or return is it going to give you? If it does not fit your plan, it shouldn’t be purchased.
Develop a resale plan before you make a purchase offer. The various terms and conditions of the purchase offer may affect the resale. How can the purchase help to prepare this property so that the next buyer will find it attractive?
Develop a management plan. Write down all of the facts you reviewed and were told that led you to believe that the property would produce a certain profit or cash flow. If the property is supposed to increase in value to meet your investment objectives, how is it going to do that? If rents are to be raised, write down how much and when. Write down the profit you must make, when you intend to take that profit and how you will operate the property to meet your objectives. The more detailed you can be, the better able you will be to see if the replacement can actually meet your objectives.
TAKE ADVANTAGE OF THE CHANGING MARKET
With Oregon’s new statewide Rent Control, we have entered a changing market. For those investors who are able to plan ahead there will be opportunities. Rather than seeing the changes in the market as a disaster, take advantage of difficult times to find opportunities that will become available.
New Video Series Out!
What Is Cost Segregation and What Does It Have To Do With Real Estate?
DJoin David Moore and our newest Expert Jonathan Frizzell with the Cost Segregation group of CBRE, as they cover all things Cost Seg! Learn what Cost Segregation is and how to use it in Part 1, and stay tuned for more. For more 1031 Exchange videos check out our channel today.
The Equity Advantage Incorporated & IRA Advantage YouTube Channels
Can’t make our monthly Equity Advantage and IRA Advantage Continuing Education Seminars? Now catch some of the highlights available online from the comfort of your cell phone or computer!
Head to our channels and watch as owner of Equity Advantage and IRA Advantage, David Moore speaks on the basics of 1031 Exchanges and Self-Directed IRA’s in today’s market!
Subscribe to our channel for more videos!
or call 503-635-1031
The Guys With All The Answers…
David and Thomas Moore, the co-founders of Equity Advantage & IRA Advantage
Whether working through a 1031 Exchange with Equity Advantage, acquiring real estate with an IRA through IRA Advantage or listing investment property through our Post 1031 property listing site we are here to help Investors get where they want to be. About Us…