At the end of the day, real estate is a numbers game. Do the numbers work for you? Fall in love with the deal, not the property. – Diane Kennedy & Dolf De Roos
There is no question that real estate is very personal, and that is okay so long as it doesn’t blind us to the numbers behind the deal. All to often I hear stories about people who paid too much because they ‘simply loved the property’ or it just ‘felt like it was meant to be’, and if you have unlimited cash flow you can likely afford to think this way. However, for the majority of us, we need to remember to put the deal before the property.
A property can meet all of our needs and even wants, but if the numbers do not make sense we could be putting ourselves at financial risk. The most successful house hunts and purchases are those that start with the numbers. You first find a home that is in your budget, or lower than your budget if it needs some renovations, you negotiate, do your due diligence with a home inspection and then you firm up your real estate deal.
Don’t get me wrong. It’s okay to dream and to imagine what could be. I’m simply suggesting that for the vast majority of us, we do not have unlimited cash flow and lots of extra cash to be taking risks with. The right deal happens when the numbers make sense and you can still dream big and be excited about your purchase. Ending up regretting your purchase or becoming mortgage poor will quickly make you wish you had valued the deal before the property.
Dolf de Roos started investing in property while still at university studying Electrical Engineering. He noticed that engineers were not uniformly wealthy, and started to study the rich to find out what they had in common. He read biographies, autobiographies, encyclopedias, and research articles, and interviewed wealthy people. He found that they had very little in common: it wasn’t age, or gender, or religious beliefs, or whether they were born into a rich family, or which country they were born in. Rather, he could only find two things that they had in common: they were all people of high integrity, and they all either made their money, or held their wealth, in real estate. “I knew then that I should invest in real estate,” says Dolf.
By the time he graduated with a PhD in electrical engineering in the mid 1980s, Dr de Roos already had a substantial property portfolio and was on his way to becoming a property millionaire.
Although he does very little electrical engineering work these days (he still runs a technology transfer company), his engineer’s approach to investing led him to work with and develop software to analyse potential property investments. Reap has sold many copies and is used by real estate agents, valuers, and investors alike. His first book, “The New Zealand Investor’s Guide to Making Money in Residential Real Estate”, co-authored with Jan Somers, was a best seller, as was his subsequent book “Building Wealth through Investment Property”. Dolf became one of New Zealand’s best-known proponents of investment property – something that would lead him to clash with Reserve Bank Governor Don Brash, who accused property investors of artificially driving up inflation. Dolf’s practical book Real Estate Riches has been a bestseller in Australia, New Zealand and the USA, including appearing in The New York Times bestseller list.
Diane Kennedy is a CPA, Tax Strategist, Business Owner, Investor and most importantly an Educator. As the author and co-author of 8 books, she discloses the wealth-building, tax-saving strategies that her rich clients use.
She is a past recipient of the Blue Chip Enterprise Award for the small business showing the most entrepreneurial spirit in Nevada, has been invited to the White House for round tables on small business financial issues and provided guidance to one of the first joint ventures from the People’s Republic of China. Her testimony was included as part of the guidelines still in force in Beijing for government approved joint ventures.
She and her husband Richard divide their time between Reno, Nevada and their beach-front home in Baja California. She actively supports a number of charities with money and volunteer time including a dog rescue for street dogs in Mexico and several Mexican orphanages. She loves to garden, cook, fish and drink good anejo tequila.
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