|Introduction||People get into real estate investing because they want to make money. They think they can go buy a property, rent it out and it will generate income. Buy enough properties and you can quit your day job and make millions.|
|Investment Strategies||There are many different investment strategies, each providing a different type of return and each coming with different types of different risks.|
Write A Business Plan
Real Estate Investing became a business for me when I started treating it like a business. And why not, it is a business. And just like any business, you need a Business Plan.
A Business Plan is not just something you write to show to other people like your banker, investor, etc. A Business Plan is something you create to help you understand where you are, where you want to go and how to get there. Your Business Plan will be different than other peoples Business Plan. For example, if you have lots of cash and just starting in real estate investing, you will have a very different plan than if you were broke and unemployed.
It seems this industry likes to come up with all these different kind of fancy terms and makes it a little difficult for people to get involved in Real Estate Investing. Really, buy rent and hold investing is a rental property.
What they do is they call it a buy rent and hold because first of all you have to buy the property. So that means going out looking for a property that you are going to eventually going to own. Then you are going to buy that property and then once you buy the property you have it under title you actually own it then you rent it out. What that means you go out and you look for tenants and you advertise for tenants, you obviously you get the property ready.
Know What You Will Do Before You Invest
Whenever you are looking at acquiring an Investment property, you should always know what you plan on doing with it.
You need to know your exit strategy.
Your exit strategy may also include a number of things to prepare for this strategy.
Your exit strategy will also influence how you acquire properties and what you are looking for in an investment property.
I hear it all the time. “Well I want to invest in Real Estate but to do that you need to get a 2,3 OR 4 plex. I can’t make any money buying single family homes because they don’t cash flow.”
What they mean is that the cost of buying that home is so high that the expenses will exceed the rents that you can charge for that neighborhood.
You can never know everything. The more you learn about Real Estate Investing the more opportunities you will have.
It constantly amazes me how much there is still to learn and that I can continue to learn. I am always looking at what I need to learn to improve in my business.
A Not So Easy Lease Option Transaction
Whenever I do a Lease Option deal there are many people involved. I have systematized the process and I delegate a lot of the activities to other people who benefit from the transaction. Here is a typical Lease Option transaction and the people involved and how they make their money.
Which is the better investment for you?
When deciding on your Real Estate Investment strategy you have to take into account how passive or active you want to be. You also have to look at the risk associated with the expected return on your investment.
Rentals can take a lot more of your time if you are doing the property management yourself. Rentals also have the higher probability of having more damages and higher turnover.