Hi, this is Frank Chen with REIClub.com, the only site you need as a real estate investor. Today I've got a quick video that should help you decide which type of Real Estate Investing is right for you!
There are really only two types of real estate investments – short term (cash) or long term (income/appreciation).
Short Term (Cash):
Types: Wholesaling, short sales, flips, rehabs, etc…
Return on your investment: Could be a few days to a few months.
Time Investment: Substantial, you are the manager, not very easy to balance with a full-time job.
Experience: Moderate for wholesaling/flips, a bit more for short sales and rehabs.
Money/Credit Requirement: No money/no credit strategies, (cash and credit) or access to private funding
Objective: quick cash deals, lower risk investment strategies such as wholesaling,
Benefits: No money out of pocket strategies, credit does not play a huge factor, money is not tied up for extended periods of time, substantial returns in a short period of time, availability and volume, less liability
Cons: Reserve money, very fast paced – real estate education to be competitive, some deals don't go to completion, some props might end up in long-term if not careful
Long Term (income/appreciation):
Types: Buy and Holds (a.k.a. Rentals), Condos, Retail Office, Duplexes, Self Storage,etc…
Return on your investment: Few years – to a life time
Time Invested: Moderate – flexibility of management companies, depends on quality of tenants
Experience: Substantial – requires long term planning, research, market analysis
Money/Credit Requirement: Some capital required, credit will determine loan, without credit is harder
Objective: Create a retirement fund, Good source of passive income, long term wealth
Benefits: Steady monthly income stream, pay for themselves while they appreciate, good way to build a retirement fund, tax incentives, government funding (Sec.8 vouchers), not fixed to sell
Cons: Qualify for loan, money is tied up for 5-10 years, maybe more, may experience a drop before the appreciation in value, maintenance, vacancies/repairs hurt bottom line, more liability
Summary: If you are investing for passive wealth (building your assets portfolio), the idea of being a Landlord doesn't exhaust you, and you are okay with little but steady income every month, I would suggest this style of investing.
Current Market: Tons of sellers, lots of buyers, currently a buyers market. Unless you can find a really good short term deal (cheap), and by good, I mean enough profit margin to enter a saturated market and still be able to sell in 30-days, otherwise, I would suggest the long term appreciation investment and wait for the market to turn, then flip for a profit. Overall, both styles offer great return, but what you need to decide is if you are wanting the big check right now, or if are you okay with building passive income now, to collect the big check later.
Again, this is Frank Chen with REIClub.com. Please take the time to leave your comments for this video below and please subscribe to our YouTube channel so you'll be automatically notified when we upload more quick video tips for you. Take care and good investing.
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