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I want to begin by announcing the creation of our new Patreon donor’s page to provide our listeners an easy way to make donations to our show, which helps us cover the costs associated with the production of the Cash Flow Guys Podcast, videos, Facebook Group, etc. That page can be found at http://CashFlowGuys.com/Donate
We built in “rewards” into the site to give donors additional value for their generous donations.
Over the last 71 episodes I have covered just about every topic I can think of that would help you get started in the real estate investing space. I realize that there are many things I did not discuss, however. I did not discuss those things because I did not want to over complicate the journey.
As I sit here recording this episode, I wonder, how many of you have actually used the information I provided you to take action that results in achieving financial freedom?
I realize that getting started in real estate can be overwhelming to say the least. To help you move past those feelings let’s get back to basics shall we?
Why:
Why are we doing this to begin with? What is it about where we are that inspired us to look to real estate as a change strategy? What paths led you here, to where you sit or stand right here and now. Do you feel you will get rich as a real estate investor? If so, define “rich”, what does rich mean to you?
Most people fail because the “why” is simply not strong enough or remains undefined. The “why” goes beyond “because I hate my job” or “because I want a Lamborghini” dig deeper.
Many of us spend a great deal of time refusing to dig deep, instead we dig shallow and then wonder why we cannot find the gold.
Some of us simply cannot move forward unless we clearly see the destination. The reason so many bookshelves are filled with unopened Real Estate Investment Courses is because many people feel they need full clarity and understanding before taking any action.
Do you want to build a business or simply a bit of income on the side?
I know plenty of people that love their job and want to keep working. Perhaps buying a few rental properties for some extra vacation money is what you are looking for. Some like the “thrill” of flipping or the hunt of buying. Regardless what attracts you to real estate investing you should set some expectations going in. It is important to spell out what your end game is, your vision if you will.
Don’t let the investing world push you into a place where you don’t want to be. The REI business has a way of sucking people in and sometimes pushing them to get over their heads.
To keep it simple, let’s visit the two main paths of real estate which are holding rental properties for cashflow and speculation in a wholesale or flip scenario.
Investing for cashflow isn’t very exciting, but over time it can be very lucrative. The key is to buy good properties in good areas using as little of your own cash as possible.
As a buy and hold investor you make money every single month for as long as you own the asset. While you are holding the property the value generally increases. If single family the value is usually tied to market conditions. If multi-family the value is generally tied to the income it generates, if commercial the same can be true, however the use value can also be considered.
During the initial learning phase you should seek out others who are already investing in the type of properties you are considering and talk to them about the pros and cons. Of the two types of strategies we are discussing today, this one is taxed at the lowest rates.
A Fix and Flipper generally makes their money by buying houses that need renovations, or can be changed by adding bedrooms or changing floor plans and later selling them for a profit. This type of investing is what we call a “speculation play”. The hold times on these types of investments are usually only a few months at the longest. Generally speaking the rehabber buys the house in rough condition at a discount from full retail value, fixes it up and then hopes to sell it for a significant profit. This strategy is much more risky than the buy and hold model thus should yield a larger reward.
Those interested in flipping are the main target of real estate investment gurus. There is an entire industry that has been created to prey on those with the “get rich quick” mentality. The safest way to proceed down this path is to take on a mentor to guide you through these shark infested waters.