The best niche in real estate...

In my first blog post I talked about my decision to get into real estate this year.

After I decided that I wanted to undergo this real estate journey, I was faced with the next step - what to focus on?

Buy and hold, commercial, multi-family, fix and flips, syndication, notes, mobile homes, etc...

I am sure that many of you have had this exact same struggle and some of you are probably still struggling with it. I knew that I had to focus on one thing in order to do well. So what did I do? I looked into all of them of course! I found many good resources, among them BP's Ultimate Beginner's Guide to Real Estate Investing. After about 5 months of listening to the podcast, reading forum posts, books, and other websites I decided on what my focus will be for the next several years.

Drumroll please.....

Raw land

What?!?! Andy, what are you thinking?!? Well keep reading and I'll let you know.

Here are my goals:

• Generate $30k in passive monthly income in order to replace and exceed my current full time income

• Build capital to take advantage of market anomalies (real estate, gold & silver, stock, etc...)

Here are my limitations:

1. I have some seed capital, but not enough to retire on if I were to get into passive investing today

2. I have a full-time job (50 hours a week) that pays the bills for my family, so time is limited

Here are my thoughts on the current real estate investing market:

I feel like we are closer to the top of this cycle than the bottom. To me that means a few things:

1. 1. I don't want to risk purchasing a lot of real estate toward the top of a market and have the value fall drastically.
2. 2. There is a lot of competition right now in SFH and Multi-family investing
3. 3. Prices are high (yes I know all about affordability and low rates and supply shortages, but house prices in my area have doubled in the last 10 years while wages have only increased about 10%)

So to revisit the earlier question: Andy - why land? Well, I'm glad you asked:

1. Land has a lower entry point than houses

2. Land is less complicated, I don't have to worry about tenants, toilets, HVAC, etc...

3. Banks are rarely involved, most land is owned free and clear

4. Less competition than other areas of real estate

5. Due to less competition, I can take more time to answer sellers and buyers. I don't have to leave my family in the middle of our plans to go see a house.

6. Multiple exit strategies that fit well with my goals:

* Passive income through seller financing - Typically a higher rates since I'm providing a service that allow many people that can't otherwise afford property a path to owing it

* Build my cash position by flipping lots

7. It is easier for me to get a longer escrow period due to the fact that the holding costs are low and people have already been holding the land for many years, what is another few months?

8. Land has much lower holding costs

9. Seller financing land is excluded from Dodd Frank

10. If I'm classified as a dealer by the IRS I'll still be able to use the installment method on seller financed deals

Of course land has drawbacks:

1. Less of a market - There are millions of people looking for homes all the time, only a few thousand are looking for land.

2. Due to number 1, land typically takes longer to sell and more marketing to find the right buyer. You can't just slap it on the MLS and wait for people to shove cash in your face

Well if you've read this far, thank you for your time!

I'd love to hear what you think about my decision in the comments below!