How to Pick the Right Real Estate Investing Strategy for your Lifestyle

Choosing a real estate investing strategy can be a huge dilemma, especially when you are just starting out. Should you invest in short sales, note sales, or flips? Should you invest for cash flow or appreciation? 
Do you invest in your home town or nationally? Trying to decide where to start can be difficult and confusing. Every 'guru' promises to deliver never ending riches with their strategy, but at the end of the day, it all comes down to what you are ready to take on, and how you want real estate investing to fit into your lifestyle.
Here are some points you may want to consider first:
Cash available
Some strategies, like buying foreclosures, require huge amounts of cash. Others, like wholesaling or buying at builder auctions, require little or no cash. In general, cash makes your investment life much easier.
  Play to your Strengths
If you cannot handle stressful rehabbing situations or hate negotiating with contractors, then rehabbing may not be the right strategy for you. Always play to your strengths and hire others to help you with your weaknesses
Time available
Different strategies require different amounts of time or require that you be available for particular hours of the week. For example, rehab is extremely time-consuming. Anything involving the government, like buying at sheriff's sales or appearing in court, generally requires that you be available during business hours on week days. 
f you have a full-time job or do not want to give up all of your after-work hours for real estate, you must not choose a time-consuming investment strategy. If you work at a regular salaried or hourly job during business hours, you probably cannot pursue a strategy which requires you to do real estate stuff during business hours.
  What do you want your Life to look like?
Take a minute to think about this. It's incredibly important to get this right, or you may regret ever investing when it takes over your life in a way you cannot control.
• What do you want your day to look like?
• How do you want to get your income – in large chunks, or monthly payments?
• Do you want employees, or do you want to go it alone?
Once you write down your 'vision' for the future, you are taking control of your life and business and you'll have a better idea of what you should and should not do with your investments. It's important to narrow down the options to really fit your life.
  What are your objectives?
• Do you want something short term or long term?
• Do you want cash flow or equity growth?
• Do you want to be hands on or hands off?
• How much time and effort can you put into your investments?
These are all important considerations which should be thought out in advance of your first transaction. Once you get clear on what you're looking to get out of your investment, you can start to seek out the right strategy.
 
What are your Options?
Make a list of Pros and Cons for each strategy and narrow it down to the ones that meet all your lifestyle criteria
 
Ask the Experts
For each of your top strategies, find someone who is an expert on that strategy and speak with them. Many veteran real estate investors are happy to share their knowledge with new investors, and hearing all about the pros and cons of their particular strategy will give you unique insight into whether or not it will be a good fit for you. 
Once you've done your homework, you will feel a lot more confident about your decision and less likely to make expensive newbie mistakes.
  Do you have these Skills?
• Am I a strong negotiator?
• Am I handy with a hammer and nail?
• Am I a good networker?
• Can I deal with forms, applications and red tape?
• Do I have good organizational and follow up skills?
• Am I a good manager?
 
Where are you financially?
• Do I have good credit?
• Can I qualify for conventional financing?
• Do I have any cash for repairs and/or holding costs?
• Do I need fast cash or a tax shelter?
• Can I get money from a private lender?
  How much Time do you have?
• Can I conduct business during normal business hours?
• Do I have more than 20 hours a week to devote to this business?
 
Here are some potential strategies:
• Wholesaling
• Fix and Flips
• Rehabs
• Short Sales
• Subject To/Lease Options
• Commercial
• Land Development/Construction
• Buy and Hold
• Tax Liens
• Bulk REO
• Note Buying
• Private Money Lending
• Syndication
 
Examples
If you have plenty of time, poor credit, no cash and wanted to invest for fast cash you might choose wholesaling.
If you have no time during the day, good credit and lots of cash you might choose private money lending or note buying since you can do that for the most part on the weekends.
Choose a strategy that matches your skills, and personality and you will have your best chance at success. For example, if you are a handyman, and enjoy working with your hands, perhaps buying and rehabbing homes to flip for a profit is a strategy for you. Research the markets you wish to operate in to see what opportunities presents itself.
The good thing about real estate is that unlike traditional businesses, you are not confined to opportunities in a specific area. If there is a strategy you think may work, but you don't have the skills, or expertise for that strategy, learn those skills, or partner with someone more experienced in that area.
Overall, be realistic, do your homework and don't put all your eggs in one basket. Real estate investing is a wonderful vehicle to build wealth and make fast cash, but you must know what you are doing and make intelligent decisions to succeed.
Here are some recent questions from my blog
QUESTION: I am in the process of acquiring a property with a partner. We are paying cash but will turnaround and get a HELOC pretty quick on it. The mortgage will be in his name, therefore the property will need to be in his name as well. We cant create an LLC and put property in it because he will be getting the heloc in his name only. Any ideas how we can structure it so we both ownership interest in it? Thanks for any feedback!
ANSWER: After closing, you can add yourself to the Deed
 
QUESTION: Ihave a rental property in Colorado and have created a Colorado LLC to hold it. However, I bought the property under my own name and have a small mortgage under my name. The mortgage company won't let me tranfer itle to the home to the LLC with the mortgage in my name. I could pay off the mortgage, but that would leave me more cash poor than I care to be. A friend suggested that I lease the property to my LLC (it's a single member) and that would give me the legal umbrella of the LLC and still keep the mortgage company happy. Anybody ever done this or heard of it being done?
ANSWER: Usually, the mortgage company will not let you transfer the title without triggering the due on sale clause. I have usually just transferred without getting them involved and as long as the mortgage is being paid, then you are fine. Going on almost 10 years of my properties being in an LLC still with a mortgage in my name.
Not sure how leasing gives you protection when it still shows your name.
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