4 Levers That Impact Your Real Estate Investing Goals

Real estate investment is one of the most proven ways to create wealth. Everyone wants to buy properties whose value appreciates with time. Some people are able to strike the gold while some keep waiting for the right opportunity.

Wealth creation takes time; it is a long journey. Those who start early have better chances to reach their destination well in time. At the same time, you will come across people who have made a fortune by flipping properties every now and then. Whichever way it works, there are some common levers each real estate investor has to factor-in while developing a sound strategy.

So, what are those common levers that impact your real estate investing goals in the long run?

Lever 1: Income

All your real estate investing goals boil down to this factor. What is your current income and what will it look like in the future? Your immediate investment goals should be based on your current income and the short term projections.

Making property buying decisions on the basis of long term income prospects is not advisable. Today we all live in an uncertain world and it is tough (perhaps impossible) to determine future income levels.

If you are looking for an investment property, you should be able to pay up the entire loan in a period of three to five years. No matter how great it is, do not buy a property on the basis of your future income estimates. This approach will help you in managing unforeseen risks.   

Lever 2: Expenditure

How much you spend is something over which you have full control. As legendary investor Warren Buffett puts across, one should spend out of the income left after taking out the amount set for savings. That's indeed a golden rule. How many of us follow that?

Mostly, the amount we save is the residual of income left after all the expenditure. Retail investors generally do not budget for expenses and that is why their savings rate keeps fluctuating.

Lever 3: Time

All the investment goals need to be time-bound. Successful real estate investors buy properties with an exit strategy in mind. Apparently it all depends on market forces how well your entry and exit plans work, a roadmap in mind could still help you take right decisions.

Whether you want to flip, rent or hold a property, it all depends on the time you wish to invest in nurturing your real estate investing goals.

Lever 4: Target

Your targets of achieving your real estate investing goals are directly proportionate to all the above three levers: income, expenditure and time.

How will you develop your property investment fund? How much you need to keep earning and saving consistently? What will be the timeframe of reaching a point where you can buy a property of certain nature? These are among the factors that make you evolve your investment targets.