BiggerPockets

There are so many different methods in real estate...I got to wonder, what are the most used methods by investors out there? I'm working hard on a plan to actually free myself from the rat race and be an independent R.E. investor. The methods I use are buy/rehab/sell and buy and hold. I haven't done a sale in a long time now but rentals are good ! The issue I find with just buying and holding is that it'll take me way to long to reach independance.
Share your methods and your thoughts.

:D

When I was a lot younger I was sooo anxious to get rich quick. As a result I did a lot of stupid things and threw a lot of money away.

Now I buy and use lease-options. If someone buys the house, I reinvest the profit, if not I use cash flow to accumulate money for another down payment. Slow and steady wins more races!

Thanks for the replies guys. What I'm trying to figure out is really how to take that big leap from a secure job to independence. I am an entrepeneur by heart but I just know that rentals cashflow do not leave enough at this point in my R.E. career to depend on it 100%. I think the way to complement the rental income will be to flip a fea a year.

Originally posted by abhyler

There are so many different methods in real estate...I got to wonder, what are the most used methods by investors out there? I'm working hard on a plan to actually free myself from the rat race and be an independent R.E. investor. The methods I use are buy/rehab/sell and buy and hold. I haven't done a sale in a long time now but rentals are good ! The issue I find with just buying and holding is that it'll take me way to long to reach independance.
Share your methods and your thoughts.

:D

Flipping and wholesaling are not investing. At best you have created a job to replace your current job. Many love it, many swear by it but that will not make you financially independent. That does not mean it might not have a place in your business model but it should not BE the model.

Buy and hold is the only strategy that fulfills the goal of financial independence through real estate investing. You are able to buy an asset (house, condo, duplex, apartment building, whatever) and have someone else pay for it (the tenants) while you enjoy all of the financial advantages of owning that asset.

The devil of course is in the details and that means managing that rental asset. Some, like MikeOH here do it all themselves, others like me, don't. You need to figure out what your strengths, temperament, goals and desires indicate in how to manage your properties. I can manage my properties like MikeOH does, but I choose not to do so. That does not make my choice right or wrong. We have different business models.

The ultimate point is, you are building a business and you must look at every decision from that viewpoint.

I would also argue, you should be looking at some point to diversify beyond just real estate investing.

I just recorded part one of a segment talking about that. I am not sure exactly when it will be released into the show stream.

But, in general the amounts you are setting aside each month for long term maintenance needs might be best be held with a tiered strategy with some/much of it set aside in ETFs (Exchange Traded Funds). These are bought and sold just like stocks. Then you combine that with an appropriate covered call strategy. This will generate more income than just parking it in a CD or savings account AND if you set the parameters correctly your risk is not very much more than a CD.

Then, when your real estate is throwing off real cash each month over and above what you need (or want) to spend each month you can look at other options for that money. It might be to reinvest it in more properties but it might be appropriate to look at things like REITs. I tend to like the privately traded ones. Or a more aggressive options strategy. Or ETFs. Or join an angel VC fund. Or another type of lending fund.

But, you do these things as you grow into them. Right now, you should concentrate on building your real estate investing business and worry about the other stuff when the time comes.

Some argue for concentration because they get the best returns and I say to each his/her own but the 1980's taught me how quickly the rules can change so I favor diversification.

Originally posted by abhyler

Mike OH, you mentioned on another post that you buy more of the middle/lower end locations because those are the rental areas. I wanted to ask you...do you see a problem in selling those properties in the future? I mean....those are mainly rental areas...and when time to sell comes....it's more difficult to sell. I have 4 out of 7 SFH in rental areas and I come across more possible good deals... but I'm afraid to get stuck with a property when I want to sell it.
I appreciate your advice.

Those areas should be the same first time homebuyer areas for low/middle income areas. You will probably sell to an FHA buyer, first time homeowner, but it should sell just fine.

Mike OH, you mentioned on another post that you buy more of the middle/lower end locations because those are the rental areas. I wanted to ask you...do you see a problem in selling those properties in the future?

I am in the rental business - I don't plan to sell the goose that lays the golden egg.

Out of curiosity, were you able to acquire at least 50 units in 5 years?

Yes. The first year I bought 10 rentals, just as planned. Then, as my business grew and my name got out there, deals started coming in faster and faster. I was able to significantly exceed my original goal of 50 rentals in far less than 5 years.

Originally posted by Anson Young

Originally posted by abhyler

Mike OH, you mentioned on another post that you buy more of the middle/lower end locations because those are the rental areas. I wanted to ask you...do you see a problem in selling those properties in the future? I mean....those are mainly rental areas...and when time to sell comes....it's more difficult to sell. I have 4 out of 7 SFH in rental areas and I come across more possible good deals... but I'm afraid to get stuck with a property when I want to sell it.
I appreciate your advice.

Those areas should be the same first time homebuyer areas for low/middle income areas. You will probably sell to an FHA buyer, first time homeowner, but it should sell just fine.

Anson, I guess in my area....these properties are not very popular with the Home buyers...but I get your point...those would be priced for lower/mid level first time buyers. Thanks !

Mike OH, I understand your point also....Rental business...not sale business. I am just trying to think of a possible exit strategy before going in. I don't plan to sell my rentals for years and years to come...not until they are all paid off and I'm ready to retire.

Thanks !

I buy a rental every time I find one that fits my criteria and I can afford it. If there is money to be made but it does not fit my rental criteria I flip it and pay down the principal. Never take profit from your real estate except rent. This will ensure, as Mike always says it, "you don't kill the goose that lays the golden eggs".

You can also buy rentals in highly appreciating markets and sell off half to pay the remaining half off. A combination of both will do you well.

Buying property is not difficult. I was speaking at a seminar a couple years ago about buying properties and ways I'd done it in the distant past. I was told it wouldn't work now. I said BS and accepted the challenge.
I picked a state, Texas and challenged myself to buy one home every day for a month. I didn't succeed, but came close. I bought 26 homes in 35 days. Dallas, San Antonio and so Texas. The MAJORITY were owner financed homes with not less than 7 yr calls and some were 30 year loans!!(I'm in one of those now). I also purchased some at foreclosure sale for cash. (8 homes).
I still believe you can do it anytime and anywhere. I've purchased, or built and closed 67 homes in the last 19 months. Some were sold and some are now cash cows. It is time to invest in another state and I hope to acquire over 50 the next 12 months. I have offers out on 16 at the present time. Rich.