What type of investing is best for you?

When getting started in real estate investing so many things come at you at once that it can be an intimidating process. It may look a little like this:

What techniques will I use? Should I wholesale? Retail? Wholetail? Hold? Pre-rehab? Rehab? Take properties subject to? How about lease option? Or sandwich lease option?

How do I acquire? I could buy with cash, credit, hard money or even try to raise private money. Should I buy personally? Maybe an LLC? Or maybe even a land trust? Partnership maybe or how about S-Corporation, nah maybe a C!

What type of deals should I buy? Singles? Multi's? Mobiles? Commercial buildings? Land?

And that's just a portion of what entered my mind after my first 2 day seminar back in 1999!

Getting into real estate investing can prove to be the best decision you will ever make but it can be frustrating. It takes work to be successful. Real work! For the most part this is not a passive investment. Even when working with professionals who will be doing most of the heavy lifting you still have to be involved in your success. That brings me to my first point and arguably one of the most important first steps to becoming a real estate investor.

What type of investing is best for you?

In order to answer that question you need to do a self analysis and financial analysis. Not all real estate investing will work for everybody. For instance, if you are someone who has very little cash reserves you probably don't want to build a buy and hold rental portfolio right away. Why? Because who's going to pay for the roof when it leaks? How about the mortgage when your tenant doesn't pay you?

Let's take a look at the questions you need to ask yourself BEFORE you even think about getting involved in real estate, even with Homes For Investors.

Self Analysis:

How much time per week can I dedicate to my investing business?

What knowledge do I posses that will assist me in my real estate investing business?

What knowledge must I obtain in order to feel comfortable investing in my first property?

Do you like dealing with people? Do you hate it?

Who do I know that can help me succeed as a real estate investor?

The above are just a few of the questions you need to be asking yourself before you begin your investing career. Once you have identified what you are ok with, now you must ask yourself some serious financial questions. The last thing you want to do is get a part time job to pay for your real estate mistakes. Ask me how I know!!!!!!!

Financial Analysis:

I have $______________ available in the form of cash reserves in order to begin my real estate investing business.

In addition to my cash reserves I have $_______________ of disposable monthly income that I can use to pay for any unexpected costs or holding costs associated with my properties.

My credit score is __________ therefore allowing me to borrow or not borrow money from a lender should it be required.

Depending on what category you fall into will determine what real estate investing techniques are best for you. Realize, as your personal situation changes, so will the techniques available to you. Below is a broad based overview of what techniques apply for certain groups of people. Although there are a hundred and one ways to profit in real estate investing, for these purposes, I am going to focus on 4 techniques that have been time tested, and give you the criteria for using each technique.

Bad Credit, No Money - Wholesaling is your best friend. This is really the only technique you should be using. After a few wholesale deals use the profits to repair your credit. Once your credit is repaired begin to build cash reserves in order to utilize other techniques.

Bad Credit, A Ton of Money - If you are this person you have a few options. They are, in my opinion, wholesaling and buying, fixing and selling. Sure you could buy a property and rent it out but what's your exit strategy to recoup your investment capital if you have bad credit? You don't have one so your money is going to be tied in one or two properties and you're out of business. It is this reason I would suggest wholesaling and retailing [buying, fixing and selling] until you repair your credit.

Good Credit, No Money - If you are this person you can probably apply for and obtain a small line of credit to get you started. Once you have obtained that money, deposit it in the bank and use it to prove to your hard money lender that you can service the debt and carrying costs on their loan. Because you don't have much cash reserve however, you don't want to put yourself into a situation where you have to borrow money conventionally as that might prove difficult. Because of this fact, I recommend only wholesaling and buying fixing and selling. Be careful when buying fixing and selling. Make sure you have enough in whatever line of credit you obtain to cover at least 12 months worth of holding costs plus some "what if" money for cost overruns and unexpected expenses [they always happen].

Good Credit, A Ton of Money - If you are this person then first of all, congrats, you're awesome. You are also, because of your responsible behavior, eligible for all real estate investment strategies including but not limited to, buy and hold, rent to own, buy fix and sell and, if you dare, wholesaling! When you have good credit and sufficient cash reserves all techniques make sense financially. The trick is to determine what techniques make the most sense for YOU. If you hate dealing with people then you might not want to buy and hold and become a landlord. Conversely if you love people you may just want to! This is where your self analysis comes into play and while it most certainly comes into play for the other people we mentioned it really means the most to you because all options are available to you.

Most people spend more time planning for their vacation every year than their financial

future. Don't be one those weirdo's! Take a quick self analysis and determine what investing

best compliments you. Then take a look at your finances and decide where you stand. After

honestly answering some of the questions here, plus more if needed, make a logical decision as

to what technique [s] you will start out with. Once you have decided what that answer is your

next step is to set goals. I know, it sounds petty but it is not. Goal setting is paramount to your

success and a major part of getting started as a real estate investor.