Before you begin investing, know where you are going

People make investing in real estate way more complicated than it needs to be.  They look at all the different options out there and start to panic. 

Should I flip, should I wholesale, do I BRRRR properties, or do I house hack? 

The truth is everyone gets carried away trying to chase the flashy deal in the room. What most people fail to do is identify why they want to invest in real estate in the first place. 

What does that really mean? Well here is how most newbies look at getting into real estate. 

I think I am going to flip houses. You can make quick money and it would be fun to remodel houses. 

I am going to BRRRR properties, it seems like a lot of people have success doing this. 

I am going to be a wholesaler. You really don't have to do much, just find and deal and offer it to an investor and you could make a quick five grand!

The problem is none of these scenarios address the why. Why do you want to be involved in real estate in the first place? So you can make a bunch of money to buy watches and cool cars? So you quit your job and be "financially free"? So you can travel the world and have your rentals pay for your lifestyle?

Well now we are getting closer but, we still need a more clear and concise end goal. How much does that car you want cost? How much income do you need to replace? What do you need month in and month out to travel around the world?

To spell it out even clearer, here is what we did. My business partner and I both agreed that we wanted to invest in BRRRR style rental properties. We wanted to do long distance investing due to rent to value ratios in the market we reside in and better returns in other markets. We also wanted at least a 12% Cash on Cash Return. To take it to the final step we wanted at least 3 properties in 2018. 

This is all great but, we still need to answer one more question, why are we doing this? To make more money or to quit your job isn't enough. You have to have a specific targeted amount of how much and by when. What is that for me? It is to have $10,000 of monthly cash flow from our rental portfolio by the time I am 50. That means our business needs to generate $20,000 in monthly cash flow. 

This goal helps guide us as we advance and grow our business. We are not going to do flips or wholesales because neither of these get us to our $20,000 MCF. We are not going to look to do development of land or revitalize a commercial property. Knowing what you ultimately want will be your guide on what type of investing or real estate venture you should pursue.

An added bonus is that it saves us a ton of time, deliberation, and money because we aren't chasing properties outside the scope of our target goal. 

So where are we going from here? We are planning on acquiring 7 additional units returning 12% CoC by the end of 2019. To help further out strategy and growth, we will be analyzing 2 8-15 unit multifamily complexes each month to help further our knowledge of these types of properties. If they match our criteria (Which we still need to outline in more detail) we will look to acquire on of these types of properties in pursue of our monthly cash flow target. 

The big idea here is, don't bother and investor with a questions of "should I house hack" or "wholesale properties"? These are entirely different strategies and produce entirely different outcomes.

First know what outcome you would like to achieve, then that will direct you on where you would like to get started.