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Should You
Borrow Money to
Invest in Real Estate? By Gerald Romine
(c) Gerald Romine - All Rights reserved –
www.KickAssRealEstate.Com
The short answer is YES! You can, and should,
borrow money to invest in real estate. However, let me clarify.
Investing is where you have a realistic plan to make a strong
return on your investment. The return is not based on
appreciation of the property. It must provide a return on
investment after allowing for costs, expenses, and an allowance
for things that might go wrong. When borrowing money to invest,
here are 3 simple rules to follow: 1. If you had the cash, would
you loan someone else the money you're asking to borrow against
the same property? If the answer is, "No," then you don't have a
great investment that you are confident in. Move on.
2. Does the risk justify the reward? Are you
making enough money to make it worth it, or are you getting
involved because you want to be "in" real estate? The only
reason for a business is profit. If there is not enough profit,
move on to another deal.
3. Is this a long term investment? If the answer
is, "Yes," then the next question becomes, "How much money are
you making monthly?" If you're not making money monthly, then
you are speculating (hoping, not investing) for future profits.
Certainly there are exceptions to these rules
depending on your financial position and your investing goals.
However, many novice investors get sucked into buying
properties. They believe, mistakenly, that real estate always
goes up in value. They hope that history will repeat itself and
they will become rich in the future from their property.
Smart and profitable real estate investors base
investment decisions on instant profitability. You can't go
broke when you are making a profit from the beginning.
About the author:
Gerald Romine is a nationally recognized real
estate expert that has been featured across North America
sharing the stage with political leaders, film stars, and
business leaders. Since 1989, Gerald has been involved with real
estate as a real estate agent, broker, rehabber, investor, and
builder and has been involved with everything from houses to
apartments. For more information about Gerald’s products or
services visit
www.KickAssRealEstate.Com
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