(Our thanks to Brandon Turner for his excellent post HERE that got us thinking about the topic)
The sad reality of human existence is that most of us have to work a day job. Even more vexing is the fact that nearly two-thirds of Americans say they are not happy at work. That’s a lot of unhappiness walking around out there. Let’s see what we can do to improve the percentage. Pardon us while we channel LeBron James for a moment and say real estate investing offers not one, not two, but at least three ways to leave the soul-killing rat race behind for good.
Keep in mind we never said real estate would fulfill your wildest dreams and make you instantly rich. What it has been proven to do by people like Jason Hartman is build a steady reliable wealth base over time. Here are three strategies to create financial independence through real estate investing.
Wholesaling: This is probably the method most often touted by industry “gurus” as the quick and easy path to wealth untold. While wholesaling is a simple method that works, don’t confuse it with being easy and quick. Basically you apply hard work, motivation, and good negotiation skills towards uncovering great real estate deals, which you then place under contract and sell to another buyer, often an investor.
Flipping: This approach involves finding houses at greatly reduced prices and often in need of repair, buying them, fixing them up, and selling them at a mark-up to retail buyers. Flipping is a great way to leave the day job behind but, once again, it is no panacea. It takes money, contacts, and the ability to answer these three questions:
1. How will I fund my flipping activities without a job?
2. How will I make monthly payments without a job?
3. Is my geographic area good for flipping?
Buy and Hold Cash Flow: This is the one that we like. REALLY like. Basically it involves buying a piece of property with some form of housing on it and renting it out. Our method is to take out a long-term, fixed-rate mortgage attached to a single-family residential house. Here’s the true brilliance of it: you buy the house with mostly borrowed money; income from tenants pays the expenses and even monthly mortgage, hopefully leaving you a positive cash flow; at the end of the mortgage, you own the property.
We actually suggest refinancing every five to seven years and using the proceeds to buy even more income property but that’s a topic for a different day. Lots of small cash flows eventually add up to a serious income. For now, realize that you are NOT stuck in a day job you hate forever. The tools to escape and live a life that more closely matches your daydreams are freely available to those with the motivation to seek them out. (Top image: Flickr | dickuhne)
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The Commercial Investing Center Team