“ Divide your portion to seven , or even to eight , for you do not know what misfortune may occur on the earth .” The Bible – Ecclesiastes 11:2
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This is good advice as long as you don ’ t get so spread out that you are doing too many things but nothing with success . It ’ s important we understand the fine line between focusing on one real estate niche without putting all your eggs in one basket , ( so to speak ).
To simplify the terms of real estate investing , there are really only three ways for investors to make money in real estate :
1 . Real estate appreciation and equity 2 . Cash flow while you own it 3 . Assignments : Payment when you flip a real estate contract without owning it .
So where do you start ? Let ’ s try to answer this question on every aspiring real estate investor ' s mind . Since real estate investing encompasses so many types of exit strategies , or as I like to call profit centers , it ’ s important to study and pick those you are most passionate about . otherwise called exit strategies .
The following is a summary of " Ten of the Most Popular Real Estate Investment Strategies " with their advantages and disadvantages . 1 . Rentals or Cash flow Investment Property : These types of investment properties are the ones that generate rental income . These are mainly apartment buildings and rental houses .
• Advantages : One of the easier ways to get started , and good longterm return on investment while also earning monthly income .
• Disadvantages : Risk of not renting property leaving you with the mortgage payment and no income . Property management can be a challenge . You typically will wait a while to sell your property , so payoff is slow .
2 . Lease Option . This is when you buy a property , then sell to someone else via a renttoown arrangement .
• Advantages : You get higher rent , and the buyer is usually responsible for maintenance . Cash flow can be good .
• Disadvantages : Most rent to own buyers don ’ t complete the purchase ( this can be an advantage too , but it does mean more work for you ). Bookkeeping must be done properly and can be complicated .
3 . FixerUpper Investment Property . These types of investment properties are the ones which are in ugly condition and need renovation . These properties can be acquired to flip after fixingup quickly or held to rent out .
• Advantages : You can receive a quick return on your investment ( months ). You usually get belowmarket value pricing on properties bringing you instant equity .
• Disadvantages : Higher risk . ( Many unpredictable expenses come up in construction .) You get taxed heavily on the gain when you sell in under a year .
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