On a recent podcast titled Mobile Home Investing and Getting Started With John Fedro I was asked, “What is your advice for newer investors that are confused about which investing niche to pursue?” Today I wanted to dive deeper into that question and give some clarity to the newer investors having this same dilemma. Once you have clarity on a path forward you can start eliminating niches that don’t make you happy and profitable.
How to Invest in Real Estate While Working a Full-Time Job
Many investors think that they need to quit their job to get started in real estate. Not true! Many investors successfully build large portfolios over the years while enjoying the stability of their full-time job. If that’s something you are interested in, then this investor’s story of how he built a real estate business while keeping his 9-5 might be helpful.
Let me first make this disclaimer. This article and my subsequent answers are all assuming that you are serious about becoming a real estate investor. Investing takes discipline and daily focused effort. If instead you have a habit of starting things you don’t finish you may wish to concretely verbalize your commitment to this business and helping others.
Let me start off answering this reader question by disagreeing with it. The entire question insinuates that you can and will invest in only 1 type of property forever, for better or for worse.
There are hundreds of ways to make money with real estate. Some of these methods involve a good deal of time and little capital, and other investing niches require capital and little time to get started. Additionally, some methods require both time and capital. A consistent part of any investing niche is experienced education.
If you are over 30 years old than it is safe to say you may have changed your career a few times since leaving high school. You may have wanted to be a doctor, then changed to a law degree, then changed to a business major. If you too, are a serial career hopper than please realize that you only had enough insights and experience to change careers once you were exposed to one in detail.
Personal example: I was pursuing my medical degree when I had the overwhelming urge that I did not want to deal with sick people every day for the rest of my life.
Real estate investing in no different. Only after having a clear picture and path to take in real estate can we decide that this “is” or “is not” the right choice for ourselves.
Personal example: When I got started I was competing against countless other investors in my market looking for traditional houses behind on payments or in foreclosure. The high degree of needed capital and the stiff competition drove me to pursue other niches. That is when I fell into mobile home investing; the passive cash-flow, low competition, low barrier of entry, and high ROI fit my goals perfectly.
How to Proceed Forward when You are Unsure How or What Properties to Invest in For Profit?
Step 1. Make a list of all the types of real estate investing niches that you have heard of. Brandon of BiggerPockets wrote a fantastic article a while back titled Top Ways To Make Money in Real Estate, which does a great job outlining many of the ways to make money in real estate.
Step 2. Know your specific goals and what attributes you possess. Are you looking for fast cash or would you rather build monthly cash-flow? Do you have a great deal of free time? How is your credit? How much capital do you have to start investing with?
Step 3. Learn more about the methods that interest you the most. Understand a clear path moving forward. Talk to a seasoned investor specializing in your desired niche and gain clarity from them.
Ask these seasoned investors to outline a typical path they could describe leading you from your current position to your first deal in this niche. Gain clarity on the skills needed and steps-of-the-path on each niche that interests you. Tip: If a mentor or local investor cannot tell you the steps needed to get to your next deal look for someone more experienced.
Step 4. Using what you have learned from your research, take massive specific action with one or two niches at a time. Eliminate the ones you don’t like or that are not producing results in your area. Understand why some methods work for you and why some niches do not work for you. Remember that if anyone else has had success in this field then there is no reason why you cannot either.
Step 5. Continually be looking for motivated sellers of all types of properties. When you find a seller and property you are unfamiliar with I encourage you to partner with someone local and experienced to help the seller and complete the deal.
Step 6. Be aware of the happiness and success you are having. If something is not working don’t take this as fact. Keep trying new things and asking for help until you are happy in a real estate investing niche (or two) you love and are successful with.
If you have additional or alternative steps that can be helpful to newer investors deciding on the correct niche(s) for them please don’t hesitate to comment them below.
Love what you do daily,