A Beginner's Guide to Real Estate Investing Strategies

If you’re thinking about investing in real estate to make money, you need to first determine your financial goals.  Do you need to make money quickly, invest for your children’s college fund, or build wealth for your retirement?  Once you determine your financial goals, you need to decide which type of investing strategy works for you.

Make Money in Real Estate - Fast Cash Strategy

If you’re low on cash, get started by wholesaling — finding a bargain house and selling the contract to another real estate investor. Join a real estate investing club to find investors willing to pay you for finding good deals.

If you are uneasy about jumping into wholesaling, perhaps you can be a bird dog (a person who locates houses for wholesalers) in exchange for training or mentorship until you are comfortable investing for yourself.

Make Money in Real Estate - Income Property Strategy

If you want to increase your monthly income, look for income property that returns a positive net cash flow from month to month.  Start with a single family house or a small multifamily property (duplex, triplex or four-plex).  Look for a bargain below market value. Fix up the property to generate top rental income.  Find properties that will rent for more than your mortgage payment and associated expenses (property insurance, taxes, maintenance and repairs).  You will need good credit to get a loan with good interest rates. If you want to get the best interest rates, consider living in one of the units for at least 12 months.  It’s called house hacking.

You may need to go out-of-state to find a property that will give you the best return on your investment.  You can’t pay $300,000 for a home with a mortgage of $1,500 that only rents for $1,000.  You might start with a home for around $100,000 that rents for $800-1,200. In a few years, your rental income should go up, along with your equity.  Many real estate investors enjoy thousands of dollars each month generated by income property.

If you don’t want to deal with tenants, factor in a property manager and manage multiple units with minimum effort.

Make Money in Real Estate – Investment Property Strategy

If you want to make money focusing on profits, a larger investment property, such as an apartment building, offers a different strategy.  Look for a multifamily property that you can add value, transform and sell that will appreciate significantly over time.  Besides fixing a house up, you can transform a property by upgrading it, remodeling exteriors and common areas, landscaping, adding amenities and increasing rents.  For instance, some investors buy apartment buildings, upgrade, reduce expenses and increase rents to significantly increase it’s value in a short period of time.  Many investors speculate in land and make money by holding the land until new development in the area increases the value.

Examine your financial situation along with your long term goals.  You can get started by wholesaling or flipping properties, move onto income properties, and then make larger profits with investment properties.  You might end up using a combination of all three strategies to start making serious money investing in real estate.

If you would like to learn more about investing in real estate for maximum cash flow, visit us at olddawgsreinetwork.com or listen to our podcast on iTunes, Stitcher , Google Play and iHeartRADIO!

Bill Manassero is the founder/top dog at “The Old Dawg’s REI Network,” a real estate investing blog, newsletter and podcast for seniors and retirees. His personal real estate investing goal, which is being chronicled at olddawgsreinetwork.com, is to own/control 1,000 units/doors in 6 years. Prior to real estate, Bill and his family lived in Port-au-Prince, Haiti as missionaries serving orphaned, abandoned and at risk children for their nonprofit organization Child Hope International.