Real Estate

The 5 Goal Properties Every SMART Investor Should Set

June 16, 20220

When you invest in real estate, your goals and plans should be specific, measurable, attainable, realistic and timely (SMART). Here are five goal properties every SMART investor should set for themselves.

1) Financially Independence

As a rental property investor, you’re on your way to financial independence when you have your mortgage paid off and all of your debts are caught up. You can also feel financially free by generating passive income through real estate investments so that you can spend more time doing what you love and less time working for money. Real estate investors in every market see profits whether it’s through rentals or flips because of their ability to generate consistent cash flow from properties. When used as investment vehicles, real estate helps investors achieve long-term financial freedom so they can retire early, travel, spend more time with family or do whatever they want!

2) Buy a Foreclosure

Looking to invest in more than one property? If you’re a smart investor, you probably already know that just because you can afford it doesn’t mean it’s a good idea. However, if you have room for another investment property and are looking to diversify your portfolio, then don’t hesitate—but make sure you do so in a way that makes sense for your situation. A rental income is only worth as much as it costs to purchase and maintain and should never be considered an easy moneymaker. Before purchasing another property, take time to assess whether or not your current financial situation is stable enough for further investment.

3) Buy Another Property

When you’re an experienced investor and have a clear vision of your goals, buy another property. This is your first goal property. It will allow you to start building equity in real estate with little risk and can help you build your portfolio for future deals. Because it is only a stepping stone, set a low asking price so that there won’t be too much competition when it comes time to sell or rent it out. Once your buyer offers $200,000 (less if you finance), take it and use some of those funds to purchase another property—your second goal property!

4) Max out your 401K

If you’re not already maxing out your 401K, it’s time to start. Contributing enough to maximize your employer-matched dollars and still have enough left over for other goals is a no-brainer. (This assumes, of course, that you don’t have any debt or college costs to pay off before saving for retirement.) One year you might find yourself in a position where it makes sense to max out both your Roth IRA and 401K; one year you might want to focus on paying down debt instead of contributing extra funds toward retirement. Either way, figuring out how much of your paycheck goes toward retirement should be on every investor’s list of goal properties.

5) Invest in real estate crowdfunding

Through crowdfunding sites like Realty Mogul, it’s possible to invest in a wide variety of properties—like parking lots, shopping centers, hotels, and apartment buildings—without ever needing to talk to a single human being. It’s called real estate crowdfunding, and as you might imagine from that description, it can be pretty disruptive for brokers. Unfortunately for them though, it’s poised to grow rapidly over coming years: The National Crowdfunding Association predicts that real estate crowdfunding will attract $13 billion in investment by 2020. If your goal is to try something new or get exposure to different types of properties (and cash out quickly if things don’t go well), now might be a good time to check it out.