As you consider investing in real estate, you may want to prepare
an interesting exercise for you may be the simple and complex game of Monopoly.
It presents its challenges and opportunities with every roll of the dice – a purchase
opportunity, a collection of rental income or a tax penalty, landing in jail or
community chest where you must pay all other players a certain sum (sounds like a
zoning violation, or a re-zoning application, a development agreement).
The game is fun and rewarding as a family exercise providing both entertainment
and understanding strategy.
In reality you need to be cautious when entering the real estate arena, using a
professional who is licensed and insured will help mitigate your risk(s).
However there are things to worry about and plan for, as you consider your
real estate investment(s). You should discuss these with your real estate professional,
How will you deal with financial leverage and what debt to equity ratio will you be using?
What about liquidity, does it concern you that it may take a long time to get to
your money invested in the property?
Do you have extra money to handle months when cashflow may be short?
Will you buy and put all your money on one property?
Are you concerned about the lack of diversification – again a defensive
investment strategy to help protect you and your money.
What about market cycles, market timing – are you concerned ?
Cyclicality of investments and the economy vis-a-vis the country you are in and the
demographics in the locations being considered for the investment opportunity.
Have you determined your investment time horizon?
When will you get out of the investment, your exit plan?
Exit strategy, getting out with your money and the desired return?
Have you determine this?
How will you hold this investment opportunity? Is there a structure set up?
This may impact the tax consequences, issues ; operational and sales proceeds/gain?
Do you have advisors or do you need to find some?
Such as lawyer, accountant, real estate representative, building inspectors, lenders, etc..
What about your investment criteria,returns,desired yields and expected objectives?
Have you considered the risk with the investment(s)?
How are you going to manage it; yourself or will professional management be hired ?
Do you require the investment to be accretive from day one?
Or do you have a safety margin/ cushion to rely on as an option?
Just a few of the questions you should explore and discuss with your real estate
professional before you start your journey into the real estate investment game.
Whenever you feel you want to discuss investing in real estate and creating a cash flow
engine for your portfolio we at Envoy Capitol Realty Inc., Brokerage would be happy
to sit down with you and have an initial meeting and discuss the possibilities.
Follow us on Twitter; EnvoyCapRealty
Blog: http://www.capitalmoves.blogspot.com
Envoy Capitol Realty Inc., Brokerage Toronto / Canada
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[above images are credited ; from Google Images; Monopoly Game from the www…]
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