Getting Starting in Real Estate Investing 2023
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George Uno
- January 31, 2023
There's a hundred and one ways to make money in real estate – which is one reason it is such an attractive asset class. But it can also be daunting to new investors. We've all heard stories of the couple who binge watched House Flipping shows but got burned on their first Fix & Flip deal. We all know it's not the houses fault…
It's who they were, and what they were doing.
To help you avoid the conflict, the stress, and the mega-money mistakes, we've put together the Real Estate Investing Roadmap. Consulting with top gurus in the industry, (people that flip 100's of houses per year) the Roadmap is designed to help you make better choices.
Even if you have the cash required to jump to the 2nd or 3rd level, most of the gurus we spoke with advised against it. Without the foundational knowledge from the steps before it, you risk over-extending yourself and getting in trouble. Here's how the steps break down.
Step 1: Wholesaling, House-Hacking, Private Money Brokering
You've got to learn to crawl before you can walk, that's why it all starts here. These strategies require the least amount of cash on hand to start. Wholesaling is especially important because learning to acquire properties directly from sellers is HUGE. The Pros do not buy their deals off of Zillow/Realtor.com/the MLS.
Step 2: Fixing & Flipping, Tax Liens
Now that you've made six figures from the previous strategies, it's time to hit the gas pedal! Fixing & Flipping should be second nature after Wholesaling 10+ deals. You know how to get properties for cheap and how to estimate the cost of a renovation now. Most people jump to this step first, so but you won't make that mistake because you're reading this.
Step 3: Buy & Hold, Investing in REI Funds and REI Trusts (REITs)
As you start to stack up cash in the bank and become an accredited investor, now is the time to start deploying your money to generate passive returns. Building your rental property portfolio or investing in Funds or Trusts. Using a Self-Directed IRA account is the best way to do this to minimize your tax burden.
Step 4: Multi-Family, Commercial, Ground-Up Construction
Your portfolio is growing, but now you can start to add Multi-Family and Commercial real estate to the mix if you want to. There are better economies of scale to managing multi-family units, so the ROI is usually better. Some people think that Fix & Flips and Ground-Up Development are pretty similar. They are NOT. Raw land development takes a lot more knowledge, capital and reliable contractors to get it right. You don't want to get it wrong.
Step 5: Syndications, Notes, and Private Lending
Most people will never hit this final level in real estate investing, but those that do can start to generate some serious wealth. Syndications on larger projects, buying high-yield mortgage notes from lenders, and directly lending funds to investors can reap huge returns.
Most gurus said to follow the Roadmap religiously. Even if you have the cash required for the next level, you don't have the foundational knowledge so you are more prone to making rookie mistakes. Extremely costly rookie mistakes.
Drop us a comment and let us know where you're at on the map and more importantly, where do you want to be?
