Before You Invest In Real Estate...

By: Alex Anderson

If you read from the Robert Kiyosaki's Rich Dad book series, you may start to wonder when exactly you can jump in and start buying up investment properties. After all, Kiyosaki spends the entirety of "Cash Flow Quadrant" telling you how you will never make your financial goals come true unless you become an investor, preferably a real estate investor. That is, if one of those goals is to become wealthy.

You may think, "Great! I'll get right into investing!" only to find that you have no idea how to do that. Or that you have tons of preliminary work to do.

Preliminary work is very important. In "Cash Flow Quadrant," Kiyosaki says that plenty of people who had followed his advice, subsequently lost everything they had built simply because they had neglected to take their time to learn to do it right. Don't be that person. Take the time. Set your ground work.

Part of that ground work is educating yourself on the basics - basic accounting, basic tax law, basic real estate law. Yes, you will have professionals doing the bulk of that work for you, but you don't want to be completely dependent on them. And you want to know what they're talking about when they give you updates. You also want to be able to ask them intelligent questions. After that, you need to consider what type of property you want to pursue and where you want to pursue it. Get to know the area. Get a feel for what you are getting yourself into.

Ken McElroy, author of "The ABCs of Real Estate Investing," breaks it down into the different levels of research. First, do online research in order to find an area to explore for possible real estate purchases. When you choose an area, call ahead and set up meetings with people who will be your advisers for the area. Then visit the area and the people you contacted. Look for investment leads. Visit sites.

Finally, know the limits of your abilities. McElroy advises would-be real estate do-it-yourselfers to avoid trying to save a buck in the beginning of the game by neglecting to build a team. Even though you need to have a basic knowledge of every aspect of the real estate game - which you will continually expand upon - you need to build a team of experts that will be able to save you time and money. Even though it doesn't seem like they're saving you money in the beginning, they are actually saving you from making costly mistakes.

McElroy advises the investor to begin by hiring on an attorney, an accountant, a real estate broker and a property manager. He warns that, before you make any purchases, make sure your real estate acquisitions business is set up correctly. (Yes, it is a business. It is a money-making venture isn't it? Then it is a business.)

After that, you will need to meet with appraisers, architects, insurance agents, property tax consultants, income tax consultants, estate planners, surveyors, structural engineers and industrial hygienists. Keep searching and meeting with people, McElroy says, until you find people whose goals and business methods mesh with your own. After all, your livelihood will depend in large part on your team. You want it to be a good one.

After you have educated yourself, researched the markets, made your goals and set up your team, then you are ready to begin hunting for investment properties.

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