Knowing what you want to do in real estate investing is important. There are tons of great avenues to make money in real estate investing. You can be a land lord, rehabber, wholesaler, short sale expert, focus on REO’s, deal funder, and many more. You need to ask yourself what your goals are with real estate investing. Do you want cash flow? Are you investing for retirement? Maybe you want to build up your cash. Every investing strategy is different and provides different challenges and rewards.
I truly believe that everyone should focus on one aspect of real estate investing to start off. If you try to do them all at first you could have a mess on your hands. If you want to be a wholesaler master that first then start adding other real estate investing weapons to your arsenal.
Becoming a Land Lord
Rental property is the best retirement anyone can have. Let your tenants pay the mortgage and give you extra cash in your pocket every month. You also have property appreciation, tax deductions, and historically rents go up just like property values go up. I have been around rental property all my life and know the huge benefits they can produce. There can be problems if you get yourself over leveraged with them, so you want to always have substantial cash in the bank to cover your costs when repairs come up or when the property is empty.
Wholesaling is seeking out affordable properties and putting them in the hands of other investors or buyers. For your trouble of marketing and finding the property you get paid a nice profit that is almost like a finder’s fee. The process of wholesaling houses is one of the most simple and straight forward investing practices out there.
Wholesaling kind of sounds like being a real estate agent but it’s different in the fact that you are putting the property under contract. Wholesaling is what I consider the best way for a person to get started in real estate investing and build up a nice pile of cash. It takes no money except, some marketing expenses and earnest money deposits. Check out this article on WHOLESALING for a more detail. The key to s successful wholesaling business is marketing. You have to be marketing like crazy.
Rehabbing is what everyone thinks of when they hear the term flipping houses. Find a discounted home which needs some fixing up, buy it, make it beautiful, and then sell it to a happy homeowner and make a nice profit. Rehabbing properties can produce some of the largest profits on deals. The key to running a successful rehabbing business is having good trust worthy contractors. If you can get contracts that do great work, do it in a timely manner and are honest you have it made.
It does take some time for the rehab project to be completed. Usually you buy the house, it takes 2 months to rehab it, and then another 90 to 120 days to get the house sold and get your pay check.
When a home owner owes more on their property or around what the property is worth there is no equity in the deal for an investor to make money. A short sale is simply negotiating with the bank to forgive some of the debt to free up some equity. Now why would banks even consider doing this? It’s because the home owner is going through some sort of hard ship and can no longer afford their mortgage. The banks do not want to foreclosure but will have to if someone does not do something. Short sales can be a great business but I will warn you they take months to complete, sometimes 6 months to a year. I am not an expert on short sales and would rather just refer them to other investors. I know of several people making a killing on short sales and I recommend everyone research them to see if they are the niche you want to pursue.
An reo is a bank owned property and let me tell you banks are not in the real estate business. Buying property from banks can be great and once you buy them you can do whatever you want with them. Wholesale then, rehab and rent them or rehab and retail them. Right now banks around the county have more real estate then they know what to do with. Yes some places have less than others but there are markets out there with endless reo deals. There are some different rules when flipping REO’s but it just takes a little research. I know investors who are wholesaling 20 REO’s a month. If you are in an area with a ton of REO’s I highly recommend you start flipping them. You don’t have to deal with emotional sellers, just with real estate agents and sometimes banks.
Get out and Make it Happen
There are several other real estate niches that are amazing ways to make tons of money. One is being a private investor, which is simply just lending money to other investors and getting a nice return on your money. There are also tons of trick and tips you can use for every deal like option contracts, and subject to. Just get out there and experiment in all avenues to find what you enjoy doing. Some people love rehabbing and others hate fixing houses. Some do not mind waiting the 6 months it takes for a short sale and others want to get paid now. It all depends on your own personal style and business model.
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