When investing in Real Estate you need to first decide what type of Real Estate you want to invest in.
You SHOULD NOT try to invest in everything and anything.
This will get you stuck and ultimately frustrated…
Deciding on your specialty or niche allows you to become an expert in that one thing.
Second, you need to determine the market you are going to invest in.
Again, do not try and go after any and every market.
That is too much to keep track of and you will fail.
The next step in this process is to decide your approach to investing.
Today I want to go over some of the different approaches that I have seen and show you that there are many different ways to get that deal done.
Getting the Deal Done
People want to know how to make their deal “sexy” or “different than anyone else’s”.
They want an edge with investors.
This is why narrowing down your approach is so key.
So how do you get this “sexy” approach?
You do it by first choosing a broad approach and then putting your own twist on it.
The Development Approach
Development is exactly what it sounds like.
You develop buildings, recreational areas, or even land for other people.
Sometimes this is developing Multifamily Apartments.
Or it could be Office Space.
I know a guy who goes out and convinces big Fortune 500 companies to lease buildings in the towns he works in.
He will put together all the project details like land, utilities, permits, building design, location, demographics, etc.
And then once he gets a company to be his tenant he will then go pitch investors and raise money for his solid deal.
I know another guy who Simply buys farmland in the “path of growth” or “path of progress” and then sell it later to developers for bug money.
There are many possibilities in development.
Buy & Hold
Sometimes a real estate fund approach will be to buy these developed projects and then hold onto them.
They know they have solid tenants on basically guaranteed leases.
This brings consistent cash flow and later can be sold after the property has appreciated or if the cap rate swings in their favor.
When investing in buy & hold you want to make sure that you have multiple exit strategies just in case something goes wrong.
Fix & Flip
These types of funds will target under-appreciated or out-dated building and spruce them up.
Maybe it is an old apartment building that needs to be made livable.
Maybe you invest in single family homes in high-end neighborhoods.
The main thing with this approach is being very specific with your niche.
Many things can go wrong on a flip if you don’t know what you are doing.
You will also usually have a shorter time frame with this one than with other approaches.
Lastly, you need to think about how short term capital gains taxes will effect you profits.
Remember that each approach will have different variables you’ll need to consider. For example, flippers need to make sure they understand their time frame and taxes down to the minute and penny!
Conclusion
There are many more approaches to Real Estate than what I have listed here.
That is why many people are so drawn to it.
It tends to be more forgiving and hands-on,
But it sure is fun!
What are some approaches to real estate that you think are important to consider?
Let me know in the free Facebook group below!
Take Care,
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DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.
I like your Real estate strategy and approach.
We buy commercial real estate and hold… forever! All rental income will be reinvested to purchase more commercial properties, growing the value of the real estate investment fundexponentially.