Everyone has hopes, dreams, and goals for the future. It is especially important to set financial goals for yourself, and one of the main avenues to achieving your financial goals is through investing in real estate. Very few investment avenues offer the leverage that real estate does for the same amount of risk. While dreams and aspirations are great, it's not possible to attain these long term financial goals without setting short term goals for yourself. If you stick with short term goals, you are more likely to achieve long term goals, quickly and efficiently.
Think far and act on near##
It is difficult to execute a complex plan. If you break it down into smaller steps and milestones, you are more likely to tackle it one by one and march towards your goals. Think about it this way: Let's say that you have a big test coming up, such as the SAT. You know that you have to study for this test. If you just wrote “study for the SAT” in your to-do list, it's such a big and daunting task that you would hesitate to start, and you wouldn't know where to start. Instead, if you break it down into little steps such as read chapter 1, review notes, and so forth, it will become much more manageable and will make it easier for you to accomplish your goals.
Defining financial goals##
First, you would have to start by defining what your financial goal is. It needs to be clear about what you are trying to accomplish -whether that is to save money for a trip, or maybe to own 5 properties in 15 years. Be specific and include timelines. That said, let us be the first to also call out that life rarely goes according to your plan! Don't tell us later that we didn't warn ya!
Strategize the steps##
Next, strategize on how you plan to achieve your long-term financial goals. This is where you break down your goals and set several smaller goals for yourself. You can start off a bit more general, but eventually, your goals should comprise of in-depth and precise steps that you will take. These become your execution milestones.
Obviously, no one can predict the future accurately, and unforeseen problems can arise at any time. Granted life may throw its curveballs, but if you work towards your goals, you are at least moving in the right direction. Hey, it's better than being aimless and spending all your money on living life in the moment.
Focus on topics like:
- How you are going to save for the down payments
- How many houses to buy every year or every few years
- How much real estate income you want to have by age 30, 40, 50, 60, etc.,
Think about topics such as location, cash flow, and appreciation (equity in the houses you own) needed to help you continue moving towards your goal. This will help you to minimize potential problems and create workarounds when life throws things at you.
What to do if you are new to real estate?##
Whether you are new or experienced, HomeKasa provides you with the resources you need to be fully familiar with all things real estate. If you are new to real estate investing, we are here to help you get started. We recommend you learn about how location impacts appreciation and cash flow. While some locations barely keep up with inflation, others such as major cities appreciate more. Smaller towns help you with cash flow and help you to accumulate more houses as they typically tend to be cheaper. Figure out which path you want to pick to achieve your goals - you may even choose to do a combo, with remote investments. Not everyone is perfect in the first try; eventually, you will build experience as well as reputation. Find a mentor in your target locations.
Maintaining existing properties##
Owning properties has its pros and cons. While you enjoy the rent and equity you are building with real estate, you also have to deal with repairs and tenants. You'd want to attend to any issues right away to keep the tenants happy and yet contain your expenses. For example, instead of replacing a vanity, it's sufficient to replace the faucet to address the drip.
Other than addressing leaky faucets and old floors, you may even consider taking even bigger steps such as remodeling the entire house or building a second floor to add value to your property. However, evaluate every decision carefully keeping your goals in mind.
For example, unless the major second-floor addition gives you sufficient return as rent, your money will be tied up in the property. If it costs you $100,000 for an addition to your existing investment property, you might push up the value of the overall property by another $200,000. While this is an attractive investment, you'll not see a return on this until you sell the place. The extra rent you get may take 10 years to break even. This could seriously delay the timeline for your financial goals, especially if you do this in a few of your properties. On the other hand, if you invest $100,0000 to buy another property say for $500,000, your net worth will go up. You add another door to your portfolio and the rent you get from this property will likely be higher than what you get from the addition. Do the math, evaluate the pros and cons, and see how it impacts your goals.
Keep an eye on your progress##
Keep track of your progress and the achievement of your short term goals. Celebrate small wins and enjoy your life - strike a balance. This will motivate you to continue working towards your long-term goals without burning out. With a visual or written measure, you can see how closer you are to achieving your goals.
Good luck with achieving all of your long-term financial goals in real estate investing! HomeKasa offers the best property management software to manage your investment properties. You can screen tenants, manage lease, collect rent, all from one place.