Given my situation, which strategy would you use?

Question

I’ve studied real estate for the past year and a half. I’m curious about choosing a strategy where I DON’T HAVE A SIGNIFICANT RISK OF LOSING MONEY and I WON’T WASTE VALUABLE TIME NOT ACHIEVING ANYTHING. Surprisingly, money is more valuable to me than time in this situation. I’ve spent countless hours on BP, books, podcasts, forums, in the field, etc etc learning about different strategies. Here are those strategies and why I’ve backed away from them:

Buying a multi family - They’re all in bad areas where I live.

Flipping houses - I heard about countless rookies who lost money flipping due to estimating the rehab wrong and not being able to sell the property in time.

Out of state investing - I heard about people breaking even on rentals due to either not being able to supervise contractors or hiring property managers who take advantage of the situation by overcharging on repairs.

Wholesaling - Everyone says it’s incredibly difficult. Don’t want to spend the money on direct mail if it goes nowhere. Your number gets labeled as “SPAM” if you cold call. Even with both strategies, you risk getting an offer stolen from you.

Owner financing - Only works during buyer’s markets.

Partnering - Don’t have someone that I can trust and be stuck with for years.

BRRRR - I took a $50k HELOC to do this, but I don’t want to risk my primary residence if the rehab goes way over budget. Also interest rates are steadily rising.

House hacking room rentals - People in my area charge rent for rooms that is so low that the numbers don’t work out.

Todd Rasmussen · Answer

@Mike Schorah

I've done or known people that have been successful and unsuccessful in all of these areas. In any investment, risk is proportional to potential return. The people I know who are successful investors would be successful in all of those areas. The people who aren't cut out for it struggle in anything they choose.

You won't find a unicorn strategy that has no risk, ample returns, doesn't take a lot of time, and is easy. If it was out there, competition for those investments would have already driven the returns out of it. Figure out what you can and will do well in each of these strategies, and pick something you feel the most confident at that has risks you think you can control and start small to minimize potential losses.

Tim Johnson · Answer

Hi @Mike Schorah, you sound like a "half-empty-glass" kind of guy! :-)

Seriously, everything you point out is true....every single strategy you mentioned has failed for somebody. But it's also true that every one of those strategies has been hugely successful for a great number of folks. So yes, I guess you're back to that issue of risk.... at some point you'll have to take a bit of risk in order to succeed.

Where do you feel YOUR specific strengths are? What do you LIKE doing? After a year and a half of studying real estate investing.... is there nothing that excites you, or makes you want to "give it a try?" It's a bit hard to tell from your post just what your goals might be?

As forum members hear a bit more detail about your actual situation (location, amount of money to invest, specific goals, interests, etc.) there will be no lack of suggestions as to which strategy might be a fit for you. Best of luck!

Jill F. · Answer

@Mike Schorah Starting up a capital intensive business entails serious financial risk. Perhaps you are just not in a good mental space to start a business? Maybe share more about your personal situation and strengths as @Tim Johnson suggested to get better suggestions.

Cole Simpson · Answer

@Paul Riley is right, partnering with investors sounds like the best option for now. What are your thoughts about Airbnb rental arbitrage? Best of luck!

Paul Riley · Answer

Hi @Mike Schorah,

It can be scary putting hard-earned money at risk. By looking at your thread, I'd say partnering is your best bet. Take the time to build relationships with a reputable investor. If you can eventually find someone you trust, you'll feel more comfortable working with them. You can also be a part of short term deals if you're concerned about longer timeframes. Shorter term deals often come with higher risk though!

Matthew Paul · Answer

Its called investing , its a gamble , there is risk , and there can be reward . Sometimes you win , sometimes you lose . Now if it were easy , everybody would be doing it , and once that happens nobody makes anything . Education costs something , it could be time , it could be money . If you are too afraid of losing , you wont ever try , and wont ever win .

I have learned by my mistakes , and they cost me some cash , once I learned the wins made up for the loses .

Honestly , if you arent prepared to possibly lose , dont invest , just play it safe and leave your money in the bank , you will be fine . I personally dont want to just be fine , I wanted more out of life . While my peers partied and drove new cars , I worked 7 days a week , bought some houses and things were tight , i played the long game , 15 years later in theory i dont have to work . They worry about retirement . ( I work because its still fun ) .

You can study real estate investing all you want , nothing beats on the job training

Mike D'Arrigo · Answer

@Mike Schorah you've pretty much eliminated nearly every strategy there is. As @Tim Johnson pointed out, somebody has failed at everyone of those strategies but there are also people that are succeeding. You are obviously a risk averse type of person, so that should eliminate a lot of approaches. From the sounds of it, I don't think that you have the experience or confidence to do a flip or BRRRR and is probably too risky for you. The best strategy for someone in your shoes might be working with a turn key company where everything is done for you. It's as close to a passive approach as you will get, however, you obviously need to vet the company very well. You can minimize your risk by knowing the area and buying only in good neighborhoods, getting a thorough property inspection to make sure there are no major issues and lastly, find a good property manager. Get recommendations from at least 3 investors that have used the PM for at least a year. There's no such thing as eliminating all risk, but if you do these things, you'll do fine.

Given my situation, which strategy would you use?

Given my situation, which strategy would you use?

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