If you?re interested in real estate investments, you probably want to earn riches on real estate based on the risk you are taking while lessening the amount of time you have to spend taking care of the property. For you to accomplish this, you have to make some wise choices upfront when you buy investment property. Your goal must be to work hard to get as close as you can be to the best scenarios as possible.
In real estate investments, when you purchase property, you are taking money out of your liquid financial assets such as stocks, bonds, CDs, and investing it into a very non-liquid asset, real estate. You were earning a rate of return on your financial assets, like 4 percent or 6 percent, and you should work hard to earn a fair cash-on-cash rate of return on your real estate. In order for you to do this, you have to pro forma your deals and buy cash flow-positive properties that earn you decent returns, not those prize properties that are negative.
All of real estate investments involve a very high risk. The development of real estate investment, land, Tenant-In-Common investments, private real estate funds, fixer uppers, and the like, all have a much higher risk profile than just buying a good old established cash flow investment property. In a lot of those investments, you will never see a quarter of your money again because there are so many opportunities.