If you’re a logical person, and I assume that you are, it’s clear that real estate is an excellent choice for either earning quick cash or building long-term wealth. But you may be saying to yourself, ” but now what? I feel lost by all of my options. Where do I start?”
When I first considered investing in real estate, I didn’t know where to start. I went to one meeting where they talked about pre-foreclosures, another meeting on commercial, another on landlording, another on rehabbing, another on wholesaling, another on mobile homes, and more! I was confused to say the least. But after going to enough meetings and talking things over with other investors, here’s what I concluded (and still believe)…
– Commercial real estate is for the big boys. In general, you can’t just wake up one day and suddenly be a commercial real estate investor. Sure, you can “flip” commercial deals, but in almost every transaction, you’ll need to come up with a few thousand dollars for one thing or another. I decided to stay away from this area until I learned more about investing in general. If commercial investing was as easy as they say it is, everyone would be doing it and be rich! The fact of the matter is you need MONEY somewhere in the transaction. If you get a deal with no money down, it does not mean you don’t have to put money in somewhere. Commercial Building owners are not dumb if it was simply a matter of putting a new property management company in place!
– Mobile homes are great for cash flow, but I’ll be darned if I’m going to spend my days collecting rent or collecting on the notes from people who live in mobile homes. Drive through one mobile home park, and you’ll know exactly what I mean. Also, mobile homes depreciate over time. I want my assets to appreciate, and you should want the same.
– Pre-foreclosures are great, but you need the skills to stop the foreclosure and either take over their property Subject to the existing financing or with a Short Sale. I now have the knowledge to do both . … but it was clear to me and still is clear that these are not as simple as other strategies, and they’re not typically the best ways to start out in real estate that have a fast payout.
– Landlording / holding rental properties is fantastic for long-term wealth. I realized that I wanted as many of these rentals as possible so long as I had a good property management company to handle them. And since this is a big city, and there are dozens of management companies, good ones are not as tough to find as in a smaller town. I also realized that rentals require credit and a few thousand dollars for the down payment & closing costs.
– Lease /Options are a fantastic way to make quick cash and cash flow with little risk. If I was to start over again today, I would simply match up all the motivated sellers with hungry buyers, and assign my option to purchase, while letting the buyer and seller transact on the lease agreement. It much cleaner, faster and simpler this way with no risk!
– Wholesaling houses is a great way to get quick cash. And it requires the least amount of knowledge. You simply get a property under contract to buy and assign the contract to another investor for a few thousand dollars. It’s a great stepping stone to rehabbing or landlording. I chose to skip right over this and go straight to rehabbing, which worked for me since the paydays were bigger. If you don’t have the cash to pay the interest on a rehab loan, then just do wholesaling. It’s relatively safe and easy.
– Rehabbing houses is a little more complex than wholesaling, but anyone can learn how to do it … even if you don’t know how to fix the little stuff like unclogging a drain. (I fall into this category.) My first few deals were rehabs, and I don’t regret it because I learned so much and made so much money. So, what did I conclude? The best way to get into real estate is through wholesaling or rehabbing. Pick one or do both. I did both simultaneously, but do as you please.