What Real Estate Investors Know About Money

Every sport has its rules. And if you are going to play the game, you need to know the rules of the game you are playing. Real estate investing is also a game with its own money rules. This means that you need to know the money rules of real estate investing if you want to invest in real estate.

Consider playing hockey. You need to know the rules of hockey. Hockey rules are very different from tennis rules. Imagine what would happen if you tried to play hockey with tennis rules. You wouldn't have a very successful hockey game. Yet, people often confuse the rules when they start to invest in real estate. Instead of playing with investor real estate money rules, they try to play with consumer real estate money rules. When they mix consumer rules with investor money rules, they play a game that does not give them what they want. It's a case of mixing apples and oranges, and ending up with lemons.

Are there really consumer money rules for real estate? The most important rule is that you have to qualify to buy the real estate. This means that the most important considerations are whether you can pay for the real estate with your own money and whether you can qualify for credit. As a consumer, you will need great credit and enough money down payment. For a consumer real estate purchase, it is first of all about you.

These consumer rules often make it difficult when you want to buy property as an investor rather than a consumer. They can keep you from making money as a real estate investor. Often this is the reason why investors are unsuccessful when they attempt to invest in real estate. They think that they have to follow consumer rules when they invest in real estate. Instead of buying as an investor, they attempt to buy the same way they buy their own homes.

Why is this such a problem? When people try to buy investment property using consumer money rules, most people cannot even get started. They can't pay the down payment or they don't have enough credit. In an expensive market, many people can't even get into the game to buy their own homes. When the market is very expensive, it is very difficult to charge enough rent to pay the mortgage.

It is possible for people to build real estate portfolios following consumer rules. The problem is that buying real estate this way ties up your money and depends on your own credit. As a means to create financial independence, this is a long and laborious way to build wealth.

Successful investors don't follow consumer rules when they invest in real estate. Even though consumers and investors inhabit the same world and buy and sell real estate, investors know that there are different money rules than consumer rules.

So, here's the good news for real estate investors. When you buy property as a consumer, it is first of all about you. Do you have enough money and credit to qualify? When you buy property as an investor, this is no longer the most important question. The primary question is: does the deal make sense? When you know the difference between investor rules and consumer rules, you can shift attention from your money and your credit to the deal itself. You can become very successful as a real estate investor when you realize that success does not depend on your money and your credit.

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