What Does it Mean to Invest in Real Estate
There are many ways to invest in real estate. Usually, when you think of investing, you think of actually conducting a financial transaction. You can invest your time as well. There are many different ways that you can invest in real estate without having to make a financial commitment or a financial transaction
The most common ways to invest your in real estate with just your time are:
- Bird dogging
- Wholesaling
- Fix and Flip with a money partner
- Buy, rent, and hold with a money partner
The first one is doing what is called bird-dogging. You can actually find a property for another person and transact that activity by referring that property to another person. Usually that other person is somebody who is doing wholesaling or somebody who is doing fix and flipping. You are investing your time here in this type of transaction.
There is not a lot of money involved in this type of investment which is called bird-dogging.
Another transaction is called wholesaling. Wholesaling is similar to bird dogging. You’ve got more skin in the game from a time perspective and you also are part of the transaction. You will actually be making an offer to purchase as a wholesaler.
Then once you put the property under contract you are going to flip it over to a flipper, to somebody who is looking for properties, like the ones you are doing.
They call it wholesaling because you are buying low and you are selling to a fixer who will be selling to and end-buyer (the retail transaction).
Another type of investment is fix and flip. Similar to how you are looking for properties as a wholesaler, you, as a fix and flipper would be looking for properties to invest in so that you can fix and flip.
Now you might find these properties from a wholesaler, you might find them from a bird-dogger, or you might be looking for properties like that yourself. It depends on how many you want.
I recommend working with somebody else to do the entire front-end work so you can scale really fast.
The other types of investment that you’d be looking for are buy, rent and hold.
These are simple properties that you are going to purchase, that you are going to hold on to for long-term and rent them out. The idea is the cost of maintaining that property, all your taxes, your mortgage payments, etc is going to be less than the amount of rent you are going to make.
You need to make a cash flow on those investment properties.
So those are the different ways that you want to invest in real estate. And those are also the different ways in which you can make money investing in real estate.
As I said, investing doesn’t necessarily mean investing your money. It means investing your time and or your money, and even when you are buying properties to hold long term, whether it’s single family homes, whether it’s multifamily homes, whether it’s apartment buildings.
You could even bring in a money partner to help you purchase those properties.
Meaning you are going to have somebody else involved so that you can buy many properties.
You are not always looking for ways in which you can raise money for a down payment. You could bring in a third-party joint venture partner, which is often called a money partner.
