If you are an investor, then over the years you may have tried multiple strategies in order to improve the effectiveness of your business. Each one of them had sustained for a certain time period, and then you would have to do research again to see what the latest trends are when it comes to real estate investing. Every field presents its own uniqueness, especially if we are talking about the real estate industry.
The real estate world can bring significant benefits to investors when comparing it to other opportunities. But there are people who do not know what strategies to use, and they do not consider it the best choice. Here are some of the best strategies you should use in 2018 if you want to be a successful real estate investor.
Pay down debt
If you want to pay down your properties faster, then you should make sure that you first check the risks of this action. You should not get into the accumulation mode and forget to protect your assets. If you want to pay the debts faster, then it is advisable to make a real estate plan, to understand if you can afford to do so. For example, one effective strategy would be to pay off a rental property, move it to a family trust and when the rate of the interest raises sell it to another real estate investor. In this way, you will receive cash flow without getting into financial issues. It does not matter what option you prefer; it is important to make sure that your cash flow increases in such a way that it allows you pay down your debt. You can utilize the strategy of sweep accounts or you can do a biweekly mortgage. The choice is up to you.
Plan according to the strategies you use
This year, all investors should be more strategic when it comes to their businesses. It is important to know what the exits are when you do an investment in real estate. Your main purpose should be to have as much passive income as possible, and as soon as possible, because it will offer you many financial benefits. Also, it is important to check what strategies offer you the possibility to make tax-free income. One smart investment is to buy an owner-occupied property and to transform it into a rental house in the future.
Decide what your goals are
The main question you should ask yourself before deciding what strategy you will use this year is: where do you want to see yourself in the statistics of successful investors under 65 years? With this mindset you will understand what your goals are and focus your efforts on achieving them. It is important to set goals from the beginning, because they will help you follow your path and not be overwhelmed during the process.
Be disciplined and focused
You may think that these are characteristics for a budget, because it is crucial to have your finances in order, but you also have to be focused and disciplined. You need to work hard every day in order to accomplish your goals. Now that you are the owner of the business you are working for, you should work harder than you would do if you were an employee. The majority of real estate investors believe that they should work on their soft skills, including sales, negotiations, time management, public speaking, and similar ones. You should also get involved in the renovation process and check every one of the properties you have and improve them by yourself. This way, you can guarantee you will reach success this year.
Build in liquidity and asset protection
If you have the property under your name, then you can consider the use of debt, an inexpensive form of asset protection. It is advisable to use HELOCs on the properties that feature substantial equity, because it will provide you both liquidity and asset protection. In the past the majority of investors did not want to use equity loans; nowadays they are a trend on the market and if you combine them with good employment, then you can be sure that you will have a good year. Also, it is important to decide what strategy you want to use when it comes to business risk. Decide if you want to pull excess capital out of your real estate company or if you want to invest in a diversified business. Some investments are safer than others, and some contracts even come with a certain insurance, so you should make sure you check all these variables before making a decision.
Invest in statutory trusts
Before making an investment, you should review the advantages of statutory trusts in the state you reside in. We’ll use the example of DTS (Delaware statutory trusts). They are trusts established under the rules of the state of Delaware, and they offer multiple benefits to real estate investors. If you choose to invest in one of the 1031 commercial properties, you will not have a voting right, you will not receive a title deed, and you will not form a single-member LLC. The greatest factor is that this strategy will offer you support if you plan to make a large commercial investment. The DTS is managed by a property sponsor, and you will have the benefit of managing the property.
Use tax strategies
For an investor, every dollar saved can help when making a new investment. This is the real secret when it comes to building wealth. You can become an agent and you will benefit from multiple passive losses. You have the ability to make real estate investments through qualified plans such as the ESA. In order to know how you can use tax strategies, you should consult with your accountant, because they are up-to-date with the tax law changes and they can help you avoid issues. You do not have to use a single strategy; you can combine them and decide on one that suits you better. For example, you can enter a new market and you can rent your properties to a single category of people, such as veterans with disabilities, and you can avoid paying taxes this way.
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