For new investors, starting the business of buying, selling and renting real estate strikes as ambitious, overwhelming and flat-out risky! As with any other area of financial education, real estate investing boils down to some simple basics. With the right strategies and the willingness to learn, real estate becomes the surest thing on the path to financial freedom.
Which Way To Go?
There are a gazillion different ways to make money as a real estate investor. Raw Land, Single family, Condo, Multi-family, Mobile, Tiny Homes, Apartments, In-state, Out-of-State, Oversees, Commercial, Notes, Partnering, Holding, Selling, Flipping, Fixing, Renting, Wholesale to name a few and then there’s a market, a sub-market and different niches too! On top of all that there is a whole dimension of “paper” money flow on top of the actual tangible property in the form of Notes, Soft and Hard Money Lending, Syndication and more. Simply, discouraging and daunting…. BRRR&R! (Yep that’s also a way to make money, really).
Successfully investing in real estate is about choosing the right way for you (niche) and becoming a master in your thing. Once you know the niche you want to get started with, you will be able to focus, become an expert and build a network within your niche. “But what’s right for me?!”, you say. I hear you!
Keep It Simple!
The wolfs on Wall Street love to daze and dazzle you with complexity so you willingly hand them your hard earned cash. Some syndicators, even in our corner, will passionately and with great enthusiasm convince you that it’s too much to even consider. The more Ka’ tching ding aling, ding for them! Don’t panic, keep calm whatever they call it:
Your strategy is either Selling for Cash or Holding for Cash Flow and
Your niche is either Residential or Commercial
It’s that simple. Anything else is just getting fancy on the same principles. So the choice you actually have to make is between the short term capital gains - the cash- or the long haul – the cash flow. This pretty much clears the fog, easy right? If you’re still hungry for more and want to soak & dive deeper check out the formula.
Residential property is a type of lease property, containing a single family or a multifamily structure that is available for occupation for non-business purposes (consists of max 4 units).
Commercial property (also called commercial real estate, investment or income property) refers to buildings or land intended to generate a profit, either from capital gain (flip, sell) or rental income (consists of 5+ units).
Notes a promissory note that is, is secured by a specified mortgage loan. Mortgage notes are a written promise to repay a specified sum of money plus interest at a specified rate and length of time to fulfill the promise.
What On Earth Is BRRR&R?
Well it’s the best of both worlds! BRRR&R is both short and long-term gains and a replicable, rinse repeat model. The process is simple Buy, Renovate, Refinance (get your cash out short term through forced appreciation by added improvements), Rent it out (cash flow and build equity on long term), Repeat!
If you really simplify things you are either still in a Job, selling for cash. Don’t be fooled by the “fast cash” of fix&flip, wholesale or any other selling strategy. Whenever you stop selling, the money stops flowing. That’s pretty much a sales job. On the other hand, you are truly building long term wealth by holding properties and renting out for cash flow.
A true investor HOLDS. That is the only way to step away from working for your money into making your money work for you. Cash keeps coming in month after month after month after… You get the picture. You can ultimately even bake your cake and eat it too. Simply BRRR&R-illiant!
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