What does your real estate investing strategy have to do with your lifestyle?
One of the questions I am asked most frequently is “How do I choose a real estate investing strategy”? There’s no doubt that some people are more suited for one type of investing strategy than another. There could be many reasons for this. One might be the type of experience that they already have. A good example would be someone with residential construction experience that decides rehabbing is their investing strategy of choice. This should be a good fit.
If your family had rental property when you were growing up, owning rental property might be an obvious choice for you (or not!). I have found that when it comes to owning rental property, folks seem to either love it or hate it.
Another contributing factor might be the type of income they are looking for. For instance, if they are looking for a completely “hands off” strategy, then they will only want to consider passive income strategies. In real estate, that would most likely be something like owning real estate that is managed by someone else, or possibly a strategy like note buying.
Your investing strategy has to be in tune with the lifestyle you desire.
If you are clear on what your ideal life would look like, it will very likely impact the path that you take. You can break that idea down a little bit and spend some time first thinking about what your ideal day would look like. If tenants and toilets don’t come to mind, then you will most likely either skip right over being a landlord, or you will know from the very beginning that you won’t manage your own rental portfolio.
When you are just starting out in those early years, your choices will be limited in most cases. What I mean is that you will most likely need to be in the trenches one way or another with whatever strategy you choose. With any luck though, if you have given this whole lifestyle that you desire some serious thought, you just might head down the right path right from the beginning.
Some strategies just naturally lend themselves better toward certain lifestyles. If you want to kick back on the beach but you want to own a thriving rehabbing business, in most cases this is going to be a conflict. That is unless you have already built your business to the stage that will allow you to have someone run it for you.
If you are the type of person that cringes at the thought of spending time on this same beach, you may choose a strategy like wholesaling or rehabbing, because you absolutely have to have a lot of “action”.
Choosing the right investing strategy is a lot like picking a partner to travel through this life with. By taking the time upfront to be clear on what it is that you want and need from this life, you will almost certainly be in a position to make better choices when it comes to your real estate investing business.
Photo: Robert S. Donovan