Bringing Structure to Investing in Real Estate

This is Rich, but I didn’t write this post!!  This is my first guest post.  It’s a big deal because I’ve turned down several offers for guest posting on my site.

I met Richelle from www.lifelibertynproperty.com at FINCON16 and was impressed with her professionalism and liked her blog.  We chatted and decided we should guest post on each-other’s blogs.  Both she and her husband had their own real estate portfolios before they met, and now they are an awesome real estate team! It’s a great article.  Enjoy!

Bringing structure to investing in real estate

Understanding your preferences in investing will definitely help clarify your goals and path to success. Simply put, knowing the investing style that best suits your persona can turbocharge your investing because the distractions are removed. Some people refer to this idea as “knowing your lane”.

It is tempting to get caught up in the excitement of investing and the prospect of being in real estate. Often, however, budding investors end up spinning their wheels without gaining any traction. Taking the time to focus on your personal goals and identifying your investing style can be invaluable to your overall consistency and growth.

Real estate investing is similar to role playing

Real estate investing can be thought of like acting or role playing. One has to learn their lines and assume their role as an investor. What we mean by this is the most convincing and highly regarded actors are those whom we believe their role. Similarly, there are many characters in the world of real estate. Indeed, flipping, wholesaling, REITS, buy and hold, crowdfunding, and turn key investing are only some of the multitude of options.

Before owning your first property you should have a burning desire to become a landlord. Read as many books as possible on the specific subject or strategy. The issue with self-study, however, is that it can quickly turn into overwhelm and analysis paralysis. Things only became more clear when you focus on a particular investing style and housing type. If you’re not all ready, began to focus on specific lessons needed to be learned to fill gaps in your knowledge.

It can be helpful to identify who you need to know in order to increase your overall success. Look for people to add to your team to fill weaknesses. This will allow targeted networking and prevented wasted time. At investment clubs and other real estate related events, guide your attention and conversation based on who you need most. Make it a point to really listen to what these influencers say and have a clue what you want to learn from them.

Ask for directions as you start your journey

Just like when traveling to an unknown city, you have two choices. You can try to get there based on gut a feeling or you can ask for directions to get you there quickly. Fear not! As a real estate investor, you likely won’t be the first person in your local community to invest in property. Many investors will have taken the same steps, thought similar ideas, and have had similar discussions and conversations.

Your investing preferences and strategy should be paired with a real estate investing business plan. Similar to the directions to get you to your destination, having a real estate investment business plan can end up saving you from losing valuable time or worse feeling lost or discouraged.

Just like how as we become more familiar with traveling, we understand what to pack and how to fold and use luggage space efficiently. Similarly, as we craft a real estate investing business plan we are better able to forecast how an investment will perform.

Once you begin attending investment club meetings, networking events, and actually investing, you’ll begin to recognize other characters in the space. Here are the four main characters and investing styles we’ve come across:

Cash Flow King

For this type of real estate investor, cash flow has the highest priority. Generating as much money as possible is the goal and typically this comes with little to no concern about location, crime or demographics. This investment style is for the more experienced investor. If you’re not into high risk, high reward maneuvers, this may not be the best direction to choose.

Solid Return Seeker

The Solid Return Seeker is a real estate investor who places a high emphasis on cash flow, but is not willing to sacrifice on quality of neighborhood to achieve it. This type of investor is willing to pay a little bit more for the investment in an effort to reduce the intensity of management required.

Appreciation Aficionado 

This type of investor cares purely about buying well located property with hopes that it will increase in value. Think about the age-old saying in real estate, “location, location, location.” This type of real estate investor is willing to take on a short term cash drain with the logic that the ultimate pay off will repay those short term expenses and still offer a handsome profit. Investing can be speculation if the investor is not knowledgeable about his/her subject matter.

Appreciation – Cash Flow Blend 

This investor is the ultimate opportunist. This real estate investor wants to play the field and win on both sides of the profit models. The person is looking for a blend of appreciation and cash flow and is willing to speculate mildly while profiting in the short term. In exchange for this trade off, this type of investor is usually willing to sacrifice ROI for hopes of a bigger pay off in the end.

Apply it – the thought process

Which of the investing styles do you resonate with the most? Create a list of the topics that you need to know and outline the things you don’t know. Take some time to think about what you are trying to accomplish and your time frame. If you are looking for returns as soon as possible, then being a Cash Flow King may be for you. If you are willing to wait a little while for a payoff instead, the appreciation-cash flow blend may be a better fit.

Skills

Research and problem-solving are critical when embarking on a real estate investing journey. Don’t worry about being right, test your ideas and talk to people. Find people with more experience who can offer credible and practical advice. In your real estate investment, use the business plan to fill your weaknesses with different mentors, friends, advisers and team members.

Attitude

Confidence is important. Go develop more confidence by doing.

Seize the day and be proactive. The answers do not magically appear and they most likely won’t fall into your lap without a little work. Roll up your sleeves and don’t be afraid to get your hands dirty. Don’t let details for things you don’t know make you overwhelmed. Maintain an openness to continuous learning and a student mentality

Bio: John Delia and Richelle Thomas

www.lifelibertynproperty.com

When you’re ready to get started investing in real estate, you need actionable tips without a lot of filler mixed in. Life, Liberty n’ Property cuts right to the chase in providing straightforward answers to the most common real estate investing questions.

Rich again.

Check out their website.  You’ll see my newest post there.

www.lifelibertynproperty.com/2016/10/22/pay-cash-for-real-estate/

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3 Comments

  1. Great explanation of real estate investor styles. But the biggest takeaway from this article is the need to “ask directions” Learn from those who’ve done it in the past! (perhaps someone like Rich could be of service) 🙂

    • Yes Mike, asking for directions so to speak definitely gets you to your destination quicker! By identifying and choosing your style, it’s easier to find a mentor to meet your needs. Rich via his perspective and blog add valuable consideration for new investors!

  2. Thank you for elaborating the structures in investing and real estate! This is a great help for people who wanted to enter the world of real estate investment.

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