We use a 3-step process for real estate investments just like we use a 3-step process to immediately get you paying less tax.
Step One: Strategy
Where are you now? Where do you want to be? What strategies and tactics will you need to use to get there?
That’s step one. Know where you are and where you’re going. Know what you need to do to get there. And don’t forget to throw in some way to measure your progress. More on that in a minute.
Step Two: Implementation
The best plans in the world don’t mean a thing unless you actually take action. There are some people who never get out of the strategy and analysis phase. We call it analysis paralysis.
Knowledge can be a trap. The more you know, the more you realize you don’t know. You never can know everything.
At some point you have to take action.
The second danger is jumping in and taking action without a plan. Ready! Fire! Aim! It does work in most circumstances. It almost never works with real estate because real estate ties up assets without liquidity. It can take time and money to get out of a bad real estate investment.
Plan first. Then act.
After implementation, you will want to do another assessment. After the real estate investment has settled out, look to see if it is giving you the return you expected? If not, what can you do to fix it? If there is no easy fix, where did your due diligence let you down? What lesson has it taught you? You need to learn from your implementation results so you can refine your strategies to become better.
Step Three: Compliance
This is the boring part, for everybody except perhaps for CPAs.
You have to report your taxable income/losses to the government. For me, this is the exciting part because it really demonstrates how you can make money by putting real, actual cash in your pocket and still legally show a loss on your tax return.
Your first step is to make sure you have the right people on your team. You may want to do your own bookkeeping. I don’t recommend it, but if you have the skills necessary and the available time, you may want to do the bookkeeping to save some money. Otherwise, get a bookkeeper. If you’re not keeping up with the monthly bookkeeping don’t plan on catching it all up later. If you’re not doing it now, you won’t do it later. Hire some help.
Real estate is the one investment that can give you three types of bonuses:
Appreciation (active and passive)
But you need to have strategies, implementation and compliance to get those benefits.
That’s what we’ll be talking about at our January real estate coaching class. It’s on the first Wednesday of month. The third Wednesday is a business coaching class and the second and fourth are Sustainable Digital Empire classes.
Find out more info about the Wednesday Coaching classes.