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The Do-Over: Smarter Strategy for Real Estate Veterans

Published on Thursday - January 03, 2013

On the verge of a new housing boom many veterans with a decade or more of real estate investing under their belts are ramping up plans to get back in to the game in a big way. What lessons should not be forgotten from the last up cycle and what real estate education and tips should newer investors glean from past successes and failures to make sure they avoid the pitfalls of the future?

9 Real Estate Education Lessons for Mastering a New Housing Boom:

1. Overhead is Evil

Avoid taking on as much fixed overhead as possible. It can strangle your business and can all too frequently choke the ability to scale up and down as the market shifts.

2. Don’t Buy a Residence

This may seem like incredibly odd advice for real estate investors but carrying on from above some veterans have said that they wished they would have waited to buy their own homes until their investment business income covered it, instead of their residences becoming overhead that could have been used to invest.

3. Curb Spending

Fixed overhead isn’t the only threat to the longevity of real estate investing success. Wild spending resulting from amazing new overnight wealth can lead many to over spend as can spending with the belief it is needed to attract more money.

4. Emergency Planning

Perhaps the single biggest culprit which hurt so many real estate investors when the bubble burst, and was likely responsible for the bubble in a big way, was failing to plan for emergencies, and even the unforeseen. It is essential to build up a reserve fund and build business continuity into your business structure.

5. Diversity

It doesn’t matter how hot any particular market is for real estate investing at the moment. Things are constantly influx. Diversifying property types, locations and price ranges can be one of your best defenses.

6. Low LTV

Leverage can be awesome but even for those planning to flip in the medium term can be caught short if they are overleveraged. Keep the LTV low and don’t get caught out.

7. Grow Faster

There are dangers of growing too fast but one of the most common regrets investors have of the last boom was that they didn’t embrace the opportunity and ramp up their volume faster.

8. Acquire Smarter

Speed is great and there are endless real estate investing opportunities out there today but even though the market may only be headed up for the next decade there is no excuse for making sloppy acquisitions.

9. Embrace Technology

Many real estate investing companies could have better weathered the last downturn or have been more successful during the last boom if they had only embraced new technology more. Don’t repeat this mistake.

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