Welcome to part of our review of what we like to call the 10 Commandments of Successful Real Estate Investing. If you missed the first five, check the recent archives. Today we’re charging ahead with commandments #6 through #10. We believe the concepts here form the foundation of any investment portfolio, no matter the the asset, though we certainly have our preference – income properties.
Thou Shalt Diversify: Many financial advisers believe that you are properly diversified when you spread your investments among stocks, bonds, certificates of deposit. We think true diversity comes by owning income producing properties spread across various geographic regions.
Thou Shalt Be Area Agnostic: The fortunes of any town rises and falls over the years. Don’t get too attached to a single area. Go where the profits are best at any particular point in time. And don’t take advice from someone who is biased towards an area. There are specific ways to determine potential profitability of a property and that’s all that matters.
Thou Shalt Borrow to Maximize Leverage and Accelerate Wealth Creation: Get rich using other people’s money. Borrow as much as possible as long as it can be repaid with monthly tenant rental checks. Leverage allows you to amplify the power of your money by maximizing the number of assets under your control.
Thou Shalt Only Invest Where There Is Universal Need: No one NEEDS stocks, bonds, or gold but everyone needs a place to live. That’s universal need. Invest where the demand is driven by need and, chances are, you’ll never be hurting for profits.
Thou Shalt Only Invest in Tax-Favored Assets: All other factors being equal (which they’re not) why not invest in as asset (real estate) that comes with heavy tax breaks built in? If the IRS is going to give it to you, we suggest you take it.
The AIPIS Team
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