Quote from @Scott E.:
Getting organized with a business plan is a good idea. But don't get too hung up on it. Knock something out in an hour later today. Scribble it on a napkin if you need to. Doesn't need to be fancy and formal. The things that I outlined on my original business plan were:
1. What real estate investing niche to focus on (in my case, I chose flipping houses)
2. What zip codes and neighborhoods would I target?
3. Who are 3 general contractors I could call if I found a deal?
4. Who are 3 real estate agents I could call to help me run comps on a deal?
5. How would I fund these deals?
Want to agree with Scott here. Don't get hung up on details. As an agent that works primarily with flippers and wholesalers, I see a lot of people fail.
The idea for every single real estate investment strategy is the same at its core: You need to sell something for more than you pay for it.
In order of exposure to risk/ holding time
#1) Wholesaling
You put a property under contract and re-sell it in a matter of days for a small profit
#2) Flipping
You put a house under contract for less than it takes to flip it and sell in a few months to make profit
#3) Arbitrage
Put a house under contract for 1 year lease, and do STR for more than you are paying monthly
#4) House Hack
Own the house, live in it, and rent rooms out for more than your monthly payment. Asset appreciates at predictable (though not constant) rates. If you don't like it, you should be able to kick the tenants out and just live there
#5) Rental
Own the house, rent it out. Stable long term rents higher than mortgage. Asset appreciates as well. Due to instability in short term markets, this should always be along term (10-20 year) plan
There are also variations on some of the acquisitions for each of these, such as hard money loans, conventional loans for house hacking, sub to on mortgages, etc. But they all boil down to the same thing: you need to sell something for more than you paid for it.
For that reason my advice to newbies is always the same and is where most people fail: you have to know how much the asset is worth. The asset is depending on which of these things your doing. In wholesaling, the asset is the contract. You need to know how much you can sell it for before you offer. For flipping the asset is the post-fixed up house. You need to know how much it will sell for before you buy it/ start renovations. For Arbitrage the asset is the rental. You need to know how much it rents for short term. For house hack you need to know how much rooms rent for/ how much mortgage will be. For LTR you need to know how much long term rent is, general maintenance expenses, and mortgage rate.
I get calls from would be flippers, wholesalers, and new agents on an almost daily basis, and especially the wholesalers, but all parties, ask me two questions: #1) do I have any off-market properties and #2) What is the retail value of those properties?
I almost always have off-market properties available but if I'm not representing you, it is super not my job to answer question #2. You need to tell me how much you are willing to pay. People always asking me what I want to sell it for. No, doesn't work that way. You need to come ready to this conversation with a price in mind. And for that reason, my advice is pick one of these things and get good at comping properties and/or find an agent/mentor who will help you. I run comps for flippers on a daily basis. It's not a science, more of an art. It's not 100% accurate. Don't rely on the people selling the properties to tell you how much they are worth. You need to know for yourself. Start watching market, see what people are paying for houses before and after flips, or rentals, or whatever you're doing. Get on wholesalers emails and watch which houses sell and which don't. But if you need to only know one thing, this is it.
