It can be overwhelming for new investors to choose their first investing strategy. The gurus love to push their latest courses and training programs.
They tell investors they must learn all about:
• Subject to deals
• Seller financing
• Self-directed IRAs
• Private lending
• Fix and flips
• Motivated sellers
• Cash buyers
• Lease options
• Real estate notes
• Being a landlord, etc, etc.
What if you could quickly create your own personal investing plan, so that you have a crystal clear focus on what you need to do right now rather than getting caught up in the endless supply of strategies.
I have some great news for you. I will help you create your own personal plan today by focusing in on some key questions that will be easy for you to answer. Your responses will become your pathway to your personal investing plan.
Ready to give it a try?
1. Do You Need to Create Income Right Now?
In 2006, I had to answer this question as I decided to leave my “comfy” Corporate America job. At that point my two daughters were entering 9th and 11th grade.
You know what comes after high school right? Yes, college, and that created even more pressure to quickly create the income needed to replace my corporate income, along with being certain I could put my great kids through college.
I say that so you realize it’s okay if you need to use real estate as a vehicle to create a business that supplies you with a steady stream of income. Some gurus teach that true real estate investing is only investing for long-term wealth.
We All Have Different Starting Points
Some of us are saddled with a lot of credit card debt. Others are painfully behind on their retirement. Some have a huge pile of student loan debt, and others may have to pay for a daughter’s wedding.
Maybe you are where I was in 2006, and you’re just tired of working a regular job. You have to take a totally honest assessment of where you are right now to decide if you need income right now.
If you do need to create income, you’ll want to consider three ways to do it buying and selling houses.
Wholesaling: This is the typical path for newbie investors. It’s a great way to learn what a deal is, how to estimate repairs, calculate your maximum offers, and create income controlling houses and assigning contracts to other investors.
When I left Corporate America, I did it by wholesaling in volume. One myth is that wholesaling is only for beginners. There are a lot of genuine, large wholesaling businesses that have emerged over the past few years.
These volume wholesalers are doing 100 – 400 deals per year focused on this one easy, beginner strategy.
Fix and Flip: This is a great way to create income by finding a great deal in a desirable area, renovating it, and selling it retail to an owner occupied buyer. You can start off doing one “fix & flip” at a time or you can build a sizable business doing multiple flips at a time.
Fix & flips are a bit like day trading stocks, and there are a lot of moving parts that must be tightly managed in order to create the nice paydays. It doesn’t work just like you see it on HGTV. But when done right, it can be a source of very nice paydays.
Turn-Key Rentals: This is where you focus on fixing rental properties and selling them to other investors who want to build their rental property portfolio. The nice thing about this buy/sell model is that your buyers will likely buy multiple properties from you, similar to how wholesaling works.
They want a strong return on investment and some equity in the deals that you tee-up for them, and you can create a lot of active income selling turn-key rentals.
2. Are You Ready to Create Long-Term Wealth?
If you don’t need the fast income stream, you’re likely ready to begin working on investing in hard assets that create long-term wealth. When you can invest in true hard assets that provide cash flow, equity, and great tax benefits, you’ll really love investing in real estate.
Rental Portfolio: There are a number of great real estate asset classes to choose from including single families, apartment complexes, mobile homes on land, mobile home parks, self storage, and commercial real estate. Each class has its own benefits.
As you learn to leverage debt, create deal flow, and build your network, you’ll be able to invest in each one without relying on your own cash, credit, or banks.
Each asset class can quickly spike your equity position, net worth, and long term multi-generational wealth.
Private Lending: If you’re not excited about being a landlord, but you have access to capital, you may want to consider growing your long-term wealth as a private lender.
Do you like the prospect of creating great ROI without doing much work?
There are a lot of ways you can participate in real estate deals with your capital. Do you know a great flipper who needs short-term capital? I typically pay 9-10% interest on my flips. Knowing how compound interest and the rule of 72 works–that 9% interest will double in value every 8 years.
It’s a nice way to invest on your local Main Street instead of Wall Street. There are a lot of sources of capital including those wanting diversity from the stock market, CDs, home equity, and IRAs.
Participating in other people’s deals is a great way to create nice ROI. You’ll find that leveraging your investment in other people’s deals on flips, joint ventures on rentals, and learning strategies like wrapping notes will open up some great opportunities for building long-term wealth.
So, Which Do You Need?
- Income now
- Long-term wealth
Everyone reading this needs one or the other, and with real estate investing, both are completely possible. Sometimes investors start off by focusing on income now and once their immediate needs are met, they begin focusing on the true wealth building.
Keep things simple and identify where you are right now and what your immediate needs are, so you can clearly focus on the one plan that meets your needs.
What’s your biggest challenge and fear with investing in real estate? Leave me your comments, and I’ll be happy to help you get rolling on your personal investing plan.