The 3 Rules of Investing - Tips for Multifamily Success
What if you could directly influence the value of your investment? In most instances, investors cannot do this, which can feel both frustrating and disempowering.
With multifamily, you can directly impact the value of your investment by increasing the income and/or reducing expenses. When you do this, the value of the property increases. This is what we call “forced appreciation.”
Most people purchase financial products and think they are investing when they are purely speculating (or gambling!). Investing does not need to be complicated, and if you follow the three rules to investing checklist, you will significantly increase your odds of success!
- Protect your principal
- Buy at a discount
- Add value
Let’s use a mutual fund as an example.
Can you protect your principal?
When you purchase a mutual fund with 20 companies packaged inside of the
fund, you should ask yourself if you are investing or simply speculating. With a mutual fund, you lack control over your principal and are held victim to the market. At DMI Holdings, we believe you are speculating and cannot effectively protect your principal.
Can you purchase at a discount?
If you get lucky and the entire stock market is down at the time of purchase, then maybe. However, you have no idea what the value of each stock inside the mutual fund is when you buy into the mutual fund. Again, the answer is no.
Is there any possible way you can add value to a mutual fund? Unfortunately, the answer is no.
In order to add value to the mutual fund, you would need to purchase shares in the mutual fund management company. Standard investors will not have an opportunity to invest in the management company.
If you owned shares in the management company, you would be following the three rules to investing, and you would make money regardless of whether the mutual fund was up, flat, or down. These opportunities are very, very rare and often not available for standard investors.
Stop speculating and start investing!