I posited a comment in the member introduction page a little earlier, but now I wanted to take the time to get some feed back and opinions on how to proceed with starting my REI career.
In my research I have concluded that there are 3 options for people who are just starting out in Real Estate Investing (in no specific order):
2. Fix and Flip
3. Buy and hold for Rental Income
Because of our financial situation and me being a licensed Realtor the Fix and Flip and Buy and Hold strategies are the most appealing to me at this time.
My question to the community is if you had >$200,000 to invest into your real estate business would you begin by buying and fixing rehab properties or would it make more sense to begin to accumulate income producing properties.
One of my main motivations for wanting to begin to build a real estate investment portfolio is to free me from my 9-5 job to be able to spend more time with my family and focus on building the most solid financial foundatation as possible for our future. I am interested to see what this community think
I think the way you should go about it is to team up with other rehabbers in the area for your first few deals. Assuming you have capital to put in, it shouldn't be hard. What you do is find a few investors, a deal, and you get a percentage of the profits equal to your contribution. So if all in all 250k was invested in the property and you payed 50k of it, you would get 20% of the profits. This way there is less risk while you are learning as you are working with experienced investors as well as you just have less skin in the game and as such less to lose. Then as you start to build connections and capital transition into rentals.
That's more of a personal question john because many would say go down the rental road for security, cash flow and what not especially since you have a family but It also depends on your drive and level of success you want to reach within the real estate industry.
The two scenarios:
1) If you purchased a house for cash flow ( income producing property)
You would be able to quit your job and be sustained by your cash flowing property. However.. I imagine that especially with a family at some point that money will not be enough.
2) Buying to flip
You wouldn't be able to quit your job quit as soon as you'd like BUT if you just endured that job a bit longer and thought about the future then bought to flip you can start to accumulate a lot more capital. At one point you will be able to purchase both rental income to sustain your family and STILL have capital left to flip a house. The time frame for this ? Really depends on you but think about it in one deal you could potentially double your money if bought for the right price in less than one year.
I hope i was able to both visually and financially paint these two scenarios for you.
Either way congratulations on wanting to make the first step into the industry best of luck !
I believe it would take more than buying 1 rental property for me to quit my current desk job as the typical cash flow in my area with 20% down is probably around $200-$300 per month.
I have approximately $150,000 to begin operating with, I just want to make sure I am starting off right.
You have more than enough to flip. I would highly recommend looking into some auctions then.
There are great deals out there for example I bought a home for $52,000 didn't put a penny into it sold it within 3 months for $95,000.
Don't be afraid of thinking you are making a mistake go for it.
why not both?
Is this about money or is this about time? You did not provide sufficient information about yourself to be able to cater an intelligent comment. What is your life-style now? What do you want it to be? Is time more valuable or is money? Notice, this has nothing to do with RE...
I will offer a general comment by saying that while none of the 3 things you listed are completely passive, by pursuing wholesaling or flipping you will simply be trading a 9 to 5 job for a 7 to 11 job. If anyone tells you otherwise, they are lying to you. Long-term holds can be positioned to be more passive, though not completely passive either.
Bottom line, what you want and why underpins the issue of which strategy to pursue.
I totally agree with @Kenneth Huddleston
Starting small always works to get your feet wet.
I'm also just starting and I'm about to close on my second deal. the amount of info I've learned from taking action would have take months of reading and podcast listening.
If there are 2 main mantras I'm sticking to in my early stages:
1. Feel comfortable with your decision. it took me some time to realize what am I comfortable with (location, investment type, budget etc)
2. Just do something. I believe that executing a deal teaches you so much.
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