When it comes to real estate investing, I think it is really important to know what you want. There are numerous articles (including mine) that talk about the importance of knowing why you want what you want and I still believe that’s a key first step. However, along with your “why” must be your “what”.
Here’s what I mean.
My husband and I are very keen on debt free investing, which isn’t exactly a popular concept. Everything we’re doing with real estate outside of buying & holding properties is only done so that we can pay down (and pay off) our rentals. Does this mean we’ll have fewer properties? Yes, and that’s ok!
We’re also keen on not having to constantly buy more properties and generate additional activity — we have an exit strategy for our business. We want to acquire our properties, reach our cash flow goals, and then move on within a specific number of years.
Without being clear on these and a couple other “whats” we have, we could easily find ourselves veering off in directions to implement strategies that simply do not align with our desired lifestyle and overall goals.
For example, if we chose to focus all of our energies on building a solid wholesaling business, this would not align with our desire for long term passive (well, mostly passive) cashflow. If we chose to specialize on lease options in order to get some of the best tenants for our properties, we may end up needing to purchase additional homes every few years as options are exercised. There are numerous real estate entrepreneurs who are successful with either of these strategies — but that isn’t the point.
So what am I saying here?
Even if you’re just starting out and penniless, know what you want and choose your real estate investing strategies accordingly. To get you thinking about your “whats”, consider the following:
- Length of time you’d like to be involved in real estate business
- How active you want to be in your real estate business
- The things about real estate investing that really get you excited
- Resources needed and how soon (money, people)
- Your specific strengths and how those strengths can best be leveraged
You may have more than one strategy, or you may have a plan to start with one strategy for a certain number of months and then move to a second one. Fine! Just remember that another great investing niche or strategy will be always be out there to tempt you. Before considering any new strategies, be sure to double check those “whats” and stand firm.