The 3 Action Phases Of Real Estate Investing

real estate investingIn my last article I discussed and did a book review on real estate investing by Peter Kinch called The Canadian Real Estate Action Plan: Proven Investment Strategies To Kickstart & Build Your Portfolio but we did not discuss one of the key strategies discussed in the book called the 3-action phases.

Each phase covers a different phase of a real estate investing cycle Kinch promotes in the book. I personally agree with many of his philosophies and ideas and this one definitely condenses a general outlook that’s digestible for new and seasoned real estate investors alike.


Phase One: Seed Capital

real estate investingThe first thing you should do when you are considering getting into real estate investing it to figure out how much money you have right now. If you have $30,000 or $100,000 or $200,000 available right now to buy real estate, determine how much that is worth on the market. Then determine what the best way to use your seed capital truly is.

Kinch talks about the importance of getting educated on real estate investing consistently and regularly. That doesn’t mean you have to go out and take some expensive real estate course.  What he’s talking about is taking some courses, reading a lot and actually investing with your own money. You’re obviously going to run out of your own money at some point and that’s when the book leads into…

Related: Review of The Canadian Real Estate Action Plan by Peter Kinch


real estate investingPhase Two: Joint Venture Capital

Joint venture capital is a big topic and Peter Kinch talks about it on a level that works in a book like this so that people who are trying to get into real estate investing are educated early in their investment venture on what it is and where it’s going.

The book talks about attracting joint venture money after discussing seed capital because the best way to attract joint ventures is to prove that you’ve already accomplished something in the past.  A proven track record speaks for itself.

It’s very difficult to go to somebody and ask for capital to invest in a property you’re looking at with no experience. It’s so much easier to learn and make mistakes with your own money rather than someone else’s.

Real estate investing is about buying and holding properties.  But  being successful at it is about buying and holding the right properties. Sometimes you need to know when to sell bad properties and there are times when it’s appropriate to sell good properties too.  This leads into the next phase.


Phase Three: What Are You Going To Do With The Properties?

At some point in time you will ask yourself what you’re going to do with all your properties. You may be getting close to retirement or the major goal you initially set out to achieve with your portfolio, either way, you’ll eventually wonder, “what’s next?”

real estate investingI guess the interesting thing I found in this section of the book was that over the 5, 10, 15, 20 year period that you’re doing this you’re creating equity.   You may still have mortgages because you may have bought some properties out over the period of time where you had joint ventures that you may or may not want to continue having.

Which properties do you want to keep? Which do you want to sell? What if by selling properties X & Y and keeping properties A & B, you could have properties A & B mortgage free and joint venture free?

Related: 5 Real Estate Investing Mistakes You Can’t Afford To Make

If properties A & B no longer have mortgages, the cash flow is going to circle you back to the beginning of the real estate investing process: why are you buying real estate? What’s the goal? Why are you doing this? The goal is that by the end of the timeline you set for yourself, you are able to do what you initially wanted to accomplish.  You are able to reach your goal.

For anyone that’s interested in real estate investing, this book is a great read. It’s an easy read for someone that’s never been educated on the topic but also informative for those with years of experience at the same time. I highly recommend The Canadian Real Estate Action Plan and I’m sure once you’ve read it, you will too.

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