Numbers never lie. Or do they?

Today's post addresses a common misconception that costs inexperienced real estate investors thousands of dollars over the long term. When analyzing investment properties, investors have a compulsive need to oversimplify the decision-making process down to a single metric. If the cashflow on the property is X, then it's a good property. Or if you get X amount of built in equity, you've gotten a deal. Because in the end, numbers never lie, right? A tale of two properties Let's say you're … [Read more...]

Smart Leverage or Perpetual Leverage?

There comes a point in the life of every long term real estate investor where he has to make a critical choice. He has been cruising along assembling this great portfolio of real estate investments when he reaches a fork in the road. The question is, do you go left or right? That decision can be the drastic difference between losing everything or retiring early. Do you know which way to turn? Photo Credit: Frans Persoon via Compfight Case and Point Let me paint a picture for you to … [Read more...]

Getting an early start

Martin came to us referred from a personal friend and previous client of ours in the fall of 2009. He was in his late twenties, had graduated from college with an engineering degree about five years back and started working for a national consulting firm in the East Coast. He was a saver who had heard about the benefits of real estate investing in Texas, had a well defined set of goals, as most engineers do :-)  but was looking for a pathway to achieve them. What follows is a case study of the … [Read more...]

Why Equity Doesn’t Matter

If you were to ask a thousand aspiring real estate investors what is the key to a successful real estate investing strategy, I am certain that over 70% of them would say: Buy low, sell high. That answer reflects a very common misconception that the primary key to success in long term real estate investing is the amount of initial equity you get by buying the property below its current market value. Or put another way, "you make your money when you buy the house". I am sure you've heard that one … [Read more...]

How to find a great investment property

Last week, I was having lunch at Houston's in the Galleria with an old friend that I hadn't seen in a while. After some catching up, he revealed that after 15 years of two steps forward three steps back, his retirement had grown by just $10K. Not good. So, he was strongly considering investing in real estate long term (good call!) but just didn't know where or how to start. That's all the invitation I needed - The notepad was out and over the next two hours (that felt like 15 minutes) I laid out … [Read more...]

How to position yourself to buy your first investment property

In this series of posts, I will show you step by step, how to buy your first investment property. Consider this your guide to find the right investment property for you, analyze it in depth and invest in it the right way. First, we will discuss the preliminary steps you need to take to set the correct expectations and position yourself for your first acquisition. This is absolutely necessary considering the amount of misinformation and marketing doublespeak that's you have probably been exposed … [Read more...]