What is the best starting strategy in real estate to be profitable?

Question

I have considered going 'all in' into real estate but I am not sure in todays market, what is a profitable strategy. Any advice would be appreciated.

I am 45 and have years of experiance working in construction, project management, sales and business management.

I am currently a business owner doing agricultural retail. While it is still profitable, I've been struggling with being at a disadvantage against competition and I often don't enjoy what I do. I am considering leaving the industry and doing something in real estate.

I previosly flipped a house and currently own one, six unit apartment building.

I live close to Iowa City.

I have a reasonable amount of cash and equity.

In today's market, where do you see oportunity in real estate? Any suggestions?

House hacking is not an option (I have a family).

Jules Aton · Answer

At your age with a family I would be hesitant to go all in anything different than what is paying your bills. You are already doing RE, continue with a LTR or fix/flip. Also don't overlook TSM index funds for truly passive potential gains and diversification.

Michael K Gallagher · Answer

First thing that comes to mind is, does your current business have a real estate need?  is there a way you can purchase a building, put your current business in that building under a long term lease, and then sell off your business, retaining the building, and lease income along with that deal?

If you can build something, and have your business be part of that tenant mix if not the only tenant then to me that's the ideal way to "move on" and get into real estate.

Shuff Mauldin · Answer

The “best” way to be profitable — or, really, giving yourself the best odds to show a profit — is sticking with the asset class that gives you the most outs. IMO, that’s single-family.

• Largest buyer pool
• By far the most financing options (for the end buyer)
• Most importantly, the highest number of exit strategies.  --> If the numbers work as a short-term rental, a long-term rental, a flip, a BRRRR, (and so on) you’ve built in layers of protection. You’re really limiting your chances of a faceplant.  It's hard to find a deal that's going to check all those boxes but if you buy it as a LTR and you still have options you are on to something. 
• Ill contrast it with Storage.  If I build a facility and it does not work (fill up) I have to wait on someone with so much moxy they think they can do it better... oh, and they are going to want to buy it for 50 cents on the dollar.  Awfully hard to repurpose a self-storage building.

Largest buyer pool

By far the most financing options (for the end buyer)

Most importantly, the highest number of exit strategies.  --> If the numbers work as a short-term rental, a long-term rental, a flip, a BRRRR, (and so on) you’ve built in layers of protection. You’re really limiting your chances of a faceplant.  It's hard to find a deal that's going to check all those boxes but if you buy it as a LTR and you still have options you are on to something.

Ill contrast it with Storage.  If I build a facility and it does not work (fill up) I have to wait on someone with so much moxy they think they can do it better... oh, and they are going to want to buy it for 50 cents on the dollar.  Awfully hard to repurpose a self-storage building.

Is there another asset class that has caught up I'm not thinking about?

Nicholas L. · Answer

@Vernon Martin

IMO they're all difficult right now since capital is expensive and that impacts just about every strategy. so i don't think there's an obvious answer.  what are you interested in?

i'm working on a BRRRR.  it's not going to cash flow when i refinance but i will have forced equity and my capital back.  seems like your skillset might lend itself to that but i only know what you posted.  and again, BRRRR is not a cash flow strategy, it's an equity strategy.

Elealeh Fulmaran · Answer

Given your skills and equity, I’d suggest keeping it simple and profitable:

• BRRRR-lite on SFRs/duplexes — focus on quick, clean rehabs, stabilize, DSCR refi, and repeat.
• If you prefer fewer tenants — consider small neighborhood retail or industrial with sticky local businesses.

BRRRR-lite on SFRs/duplexes — focus on quick, clean rehabs, stabilize, DSCR refi, and repeat.

If you prefer fewer tenants — consider small neighborhood retail or industrial with sticky local businesses.

Next step: pick one lane, define a clear buy box, and line up financing (HELOC for speed, DSCR for takeout). Hope it helps :)

James Hamling · Answer

Multiple exit strategies, way too little is said of this and it's value.

And with it, multiple pivot strategies.

Speaking with a client just yesterday, he had a property he bought to OO.

He then started house-hacking via room rentals.

Than he did some basement improvements, and shifted to doing ti more like a duplex so didn't have to share his living space.

Now most recently did the whole place a standard rental after moving to a new OO home.

And now, engaging into adjusting layout, maximizing bedrooms and going to turn into a sec8 rental and gain another 30% gross revenues.

Why sec8? Beside the added revenues, the neighborhood has gone into decline, retail value dropping. Via the multiple strategies feature to it we not only can pivot strategies to mitigate the negative BUT actually PROFIT.

SFR's are so unique and rare in this regard.

James Hamling · Answer

If asking what is the most profitable, simplest, assured path to successful entry into Real Estate Investment.....

It is: Get a Real Estate License, Learn wholesaling, put the 2 together.

Everything starts with ability to source leads. Foundation of all things, right.

And in sourcing leads, it costs $$$$.

As a licensed agent you have more monetization options at your disposal, for said leads.

This increases profitability, lowers expense.

Next is training. As a licensed agent, you have maximum access to training and education opportunities and resources.

Now credibility, which speaks back to leads in manner of convertibility of leads into closed monetized deals. Being licensed increases credibility.

Now network. As a licensed agent you have the greatest access to network opportunities and resources, which again feeds back like credibility to lead production, conversion, monetization.

In summary, the best way to become a real estate professional is to become a real estate professional.

Travis Timmons · Answer

There's no easy answer and real estate does not pay you well if you need the money. This is not revelatory, but there are generally two types of investors -

1. Investor that buys real estate and makes money doing something else.

2. Investor that runs a real estate business.

You have to figure out which one of those you want to be. As you know, starting a business is very difficult. It's either changing your career situation and continue to go the "slow and steady wins the race" route by picking up additional properties over time OR find your lane and take a swing.

And don't sleep on the live-in flip option...I also have a family and am in the middle of my 3rd one. If you have a reasonable amount of cash and equity, you can get the major repairs done prior to moving in.

Al Bazzy · Answer

Hey Vernon! With your background in construction and management, you’ve got a huge edge, especially if you’re considering flips or buy-and-hold rentals.

A lot of investors I’ve seen recently have been focusing on cash-flowing single-family homes in affordable markets rather than chasing appreciation. If you’re open to out-of-state options, Detroit has been performing really well for turnkeys, solid returns, steady tenants, and great entry prices compared to other areas.

Several of our out-of-state investors have built consistent cash flow portfolios with less day-to-day involvement since the properties come renovated and managed.

Happy to share a bit about what’s been working there lately if you’d like!

What is the best starting strategy in real estate to be profitable?

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