I was recently listening to a podcast of a real estate investor, one who might even be considered a guru. In this particular podcast he was touting the benefits of a certain type of residential real estate investing, but he also was disparaging all other types of investing that didn’t have anything to do with his preferred method or strategy.
I couldn’t help but think this could be really confusing for the new, weekend or part-time investor who’s trying to find his or her way while starting or building a real estate investing business. I could see how that would be disenchanting, confusing or even very discouraging for the new real estate investor who might have his or her mind set on one of those other strategies.
In contrast to what that guru was espousing, I see one of the great aspects of residential real estate investing as having many viable investment strategies underneath the umbrella of real estate investing—each with its own merits and challenges. The beauty of real estate investing, from my experience, is you can pick and choose which works best for you. You can have it your way!
I listen to a lot of real estate investing podcasts. For the new or budding real estate investor I encourage you to explore some of the podcasts out there. It is a great way to increase your exposure and education.
This one podcast I was listening to was touting the benefits of buy-and-hold real estate investing or rentals. I am a huge buy-and-hold investor; it’s one of my preferred strategies. To be honest, I would love to keep every house I buy as a rental and buy-and-hold property. So, I don’t disagree at all with his position.
But I will tell you at the same time, I also do fix-and-flips, and I invest in wholesale houses. Though I agree with this guru on the value and merits of buy-and-hold investing, I also believe there are many other viable strategies.
While I’m involved with multiple strategies, I’ll be the first to say I know many investors who are successful with a single strategy. Maybe that person is just a buy-and-hold investor, a fix-and-flip investor or maybe just focuses on seller financing. There is nothing wrong with that. But I also know many investors who have multiple exit strategies.
The point is, I was a little uncomfortable with the message that there is only one way to invest. There are many different ways to start, grow and sustain your real estate investing business.
The way I like to look at it is just like you order from a menu at your favorite local restaurant. On that menu there is probably one item you order every time. At the same time, though, I’m sure there are other patrons who think this is also their favorite restaurant and who choose multiple items off that menu. They may try different things, explore different things, have multiple favorites, and they shake it up a little bit.
Well, it’s just like that with real estate investing. You may find one strategy works well for you and you stick with it, or you may find multiple strategies. That’s great, too, if that works for you.
How I counsel new investors, weekend investors or part-time investors is by giving them three guiding principles: Do what you enjoy, do what you do well, and do what you can do. Let’s talk about those a little more.
Principle No. 1: Do What You Enjoy
There is a reason I mentioned this as the first guiding principle. It’s no secret if you enjoy what you’re doing, your chances of success increase exponentially.
For those who are embarking on real estate investing, it’s usually because you’re currently in a profession or career you do not enjoy. If you’re going to make the leap, make a change and embark on a new endeavor, it might as well be something you enjoy.
For myself and many other investors, that is the sole reason we turned to real estate investment.
I encourage you to find the strategy you enjoy in the same way as you find your one, two or three favorite dishes at your local restaurant. Take the same approach with real estate investing.
Do what you enjoy; find the strategy that excites you and inspires you. Your success will increase exponentially as a result.
Principle No. 2: Do What You Do Well
What I mean by “Do what you do well” is: leverage yours skills, leverage your talents, and leverage your interests when looking at the different types of real estate investing—whether it’s buy-and-hold, fix-and-flip, wholesaling or seller financing.
For example, you may be a busy executive who does not have a lot of time. You may have knowledge and a good understanding of business with an interest in real estate. However, you may not have the time to spend on real estate. In that case, rental properties or buy-and-holds will be a great strategy for you because it will allow you to do well at your current career and also succeed at real estate investing. Buy-and-hold properties take less time and don’t interfere with your current profession.
Maybe you’re a skilled tradesperson—an electrician, a framer, a roofer or a plumber. You may have a lot of good skills and experience working on houses, so then maybe fix-and-flips or rehabs would be a great avenue for you as a real estate investor.
This is how you leverage your skills, your talents and interests. You probably enjoy doing a lot of the work yourself. For the work you can’t complete or choose not to do yourself, there is a good chance you may know a tradesperson within your network.
You’ve got pretty good resources to help in the areas that you can’t do or simply prefer not to do. Invest in a way that complements you and your current situation, your knowledge, skills, circumstances and interests.
Principle No. 3: Do What You Can Do
The final guiding principle is “Do what you can do,” specifically when it comes to choosing your real estate investment strategy or multiple strategies.
You know real estate investing is a resource-based business. It requires time, which is a very limited resource for all of us. It requires money, which may or may not be a limited resource. It may require a network of people with resources and knowledge.
There are a lot of necessary resources you need to have or have access to, in order to be a successful real estate investor. And these resources may be the single largest guide, obstacle or barrier to channeling you to appropriate real estate investment strategies.
What I encourage you to do, with respect to resources, is don’t overextend yourself, because that will guarantee your failure.
So often I see real estate investors who enter into real estate investments and don’t have the appropriate resources at their disposal. Before you know it, they have purchased a property, they’re halfway through it and don’t have the time to complete that project. Meanwhile, the holding costs are crippling the investment.
Perhaps they don’t have the money it takes to be a successful real estate investor at the scale they’re trying to invest in. They’re doing what they can’t do when they need to be doing what they can do.
Maybe they don’t have the appropriate network or knowledge. It’s like at that restaurant—don’t over-order and don’t spend too much money.
Real estate investing allows you to have it your way. Look at the menu: do what you enjoy, do what works well for you, and do what you can do. Real estate will provide you with the opportunity to pick and choose your strategy, so take advantage of that opportunity.
You can listen to the complete podcast here:
About the Author
Kevin Guz is a Dallas, Texas-based residential real estate investor with more than 10 years of investing experience. He owns a HomeVestors (or “We Buy Ugly Houses”) franchise as well as the Clear Key companies, which focus on residential real estate wholesaling, rental property management and self-storage leasing. He also is a licensed real estate agent in the state of Texas. He enjoys sharing his ongoing personal experiences, perspectives and learnings from his start as a part-time or “weekend investor” and full-time corporate professional through his ultimate transition to a full-time real estate investor and business owner. You can listen to his podcasts at http://www.blogtalkradio.com/kevinguz.