Real Estate Investing Basics

How to Develop and Implement Your Real Estate Investing Plan

Expertise: Business Management, Landlording & Rental Properties, Real Estate News & Commentary, Real Estate Marketing, Personal Development, Real Estate Investing Basics
106 Articles Written

Investing without a plan is very much like dumping all of your money on scratch tickets: you might walk away with a bigger pile of money, but the chances are much better that you’ll walk away wondering where all your money disappeared to. A plan doesn’t have to be perfect — in fact, when it comes to investing, the pursuit of perfection is often a stumbling block more so than a useful tool — but it does have to exist. Without one, you’re just gambling.

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Here are the questions your real estate investment plan should answer.

3 Questions to Develop Your Real Estate Investment Plan

What Do Your Finances Look Like?

You should have spreadsheets tracking your income, outgo, savings, and interest for at least a few months before you start this process — a year or more would be better, but a few months is a minimum. You have to understand what you can afford to invest, and that means understanding how much you can cut back on and how much you need to save. Don’t forget to keep track of any known large expenses (car/home repairs, vacations, and so on), and assign money to them as needed.

Related: Goals Without Limits: How to Make Big Dreams for 2015 into Achievable Plans

What Are Your Goals?

Different real estate investors have different goals, and your goals will determine what exactly you do with your money. So before you look into your investment options, sit down and write out your goals. You need to include how long you’re willing to have your money tied up for, what amount you’re saving to achieve, what you’re going to do with that amount (in case the value of what you want significantly changes in the interim), and how great your risk tolerance is.

What Are Your Options?

The field of real estate investment is enormous (there are far too many options for us to get into here). Now that you know what you’re willing to invest, how much risk you’re willing to take on, and how long you’re willing to wait, it’s time to go find an investment option that matches as closely to your goals as possible.

One of the biggest mistakes common to new real estate investors is a failure to understand just how expensive real estate is to maintain — be certain that, wherever you get information about your potential investments, you get a very detailed list of what kinds of maintenance costs you can expect to pay. These are the things that make or break a real estate investment.

Next Steps

Always Go In Person

When you think you’ve found an investment that looks on paper like it meets your needs, go there and look at it. Paper has a way of obscuring the fundamental flaws in a property. You might find out, for example, that an otherwise perfect home was just recently marred by the discovery of a meth lab next door, and that’s why it’s so inexpensive. Or you might find that the property description neglected to mention the fact that every time the heater comes on, the entire house smells like stale urine. No matter what kind of investment you’re going to be doing, any time a building is involved, you should be involved — personally.

Related: Think Your Business Plan is Flawless? Don’t Forget This Key Element!

Set, Go, Ready!

Once you’re set — the research has been done, the money has been set aside, a little extra money has been set aside just in case, and you’re convinced the idea is going to meet your goals — take the plunge. If you wait for the “right” moment, you’ll never invest, and you can always make course corrections as you go to keep your goals in the crosshairs.

In the end, having a plan is crucial to success in real estate investment — but the point of the plan is to get you off the starting block and pointed at the goal, not to rigidly define every step of the race.

How did you develop your real estate investing plan?

Leave a comment below, and let’s talk!

While in the mortgage business, Drew rose to a VP position at the first broker he worked for and then started his own company. In the pursuit of excellence, he obtained several mortgage designations and joined mortgage & several affiliate association Boards. He also did WebX presentations and public speaking. It was during this time he started personally investing in single-family rentals, leading him to also start Royal Rose Property Management with two partners. He also joined the Board of a local real estate investors association, eventually becoming its President. The real estate crash led to an offer from the banking industry to manage a Michigan bank’s failed bank assets they acquired from the FDIC. The bank acquired four failed banks from the FDIC, increasing from $100M in assets to over $2B while he was there. After that, he took over as President of Royal Rose Property Management. Today, he speaks at national property management conventions and does WebX presentations.
    Karen Rittenhouse Flipper/Rehabber from Greensboro, NC
    Replied about 6 years ago
    When I was starting out in real estate, I wrote out my very first goal sheet and business plan. All of my numbers were guesses. You recommend starting out with at least somewhat of a track record – I had nothing. Nevertheless, this was the best exercise I could ever have done. It made me think through what my goals and desires were. It made me think about numbers and possibilities. I made decisions about how I wanted to invest. And, looking back over time, it gave me the ability to see where I was overreaching and where I was not pushing hard enough. If I hadn’t written it down, I would never have known. This is the perfect time to stop, think, and write. It may be the most important time you spend to prepare for the year ahead. Thanks, Drew, for your post.
    Drew Sygit Property Manager from Birmingham, MI
    Replied about 6 years ago
    KAREN: great share, making our article even better — thanks!
    Yvon N
    Replied about 6 years ago
    Thanks for the pointers
    Drew Sygit Property Manager from Birmingham, MI
    Replied about 6 years ago
    YVON: the best way to thank us is to successfully implement our suggestions:)
    Mudashiru Usman
    Replied over 5 years ago
    Thanks for your inspration tips keep it on!