Training Day - Determine Your Strategy and Contingencies

You may be wondering what kind of strategies and contingencies go along with real estate investing. Well I wish I could tell you there is one perfect way to do this every time but real estate investing is more complex than that. The truth is there are many strategies you can use and will most likely be unique to your personal and financial situation. That may sound overwhelming but once you begin to talk and research, there will be one niche that stands out to you. The trick is to find something what suits you and your needs the best. For starters you can be a residential house flipper of single-family homes or even multifamily homes, they both are similar but require slightly different approaches. Then there’s commercial flippers who rehab homes over five plus units, which is a whole different ball game. Perhaps you decide you want something more passive and long-term, enter rental property investing. Rental properties require a different approach and like flipping there are different strategies available to implement. Some additional common niches include house hacking, live and flip, wholesaling and Buy Rehab, Rent, Refinance, Repeat (BRRRR).

House hacking is a good way to get a foot in the door for beginners because it is the least risky, reduces your living expenses assuming you set it up correctly, and it gives you experience as a landlord. Live and flip is another great way to start out and help build capital, by basically buying a home you will be living in that requires some work and then selling it a couple years later for profit. Wholesaling is a grey area depending on your state, but essentially you find and claim cheap homes/deals for buyers and sell it for that price along with a finder’s fee. BRRRR is a fast wealth builder, but also the most complex due to the amount of moving parts and planning required. BRRRR is not a friendly beginner niche but I am not saying it is impossible just that it may require the most work and time to develop. Once you have chosen your niche begin planning a strategy. Once you have your strategy don’t forget to create back up plans in case those deals go bad or are not quite what you expected them to be. A back-up plan can be as simple as selling a property sooner than expected or a little more complex by allowing the property to season before taking a corrective action. So, what niche are you going for? Which one would you say fits you the best?