Flipping, Renting and Wholesaling

As you know, I feel passionately about teaching professionals from all industries and walks of life the critical skills needed to start investing in real estate. Real estate investing is an ideal vehicle for creating multiple monthly cash streams, and I believe it can be an excellent companion and springboard for your existing professional practice. Whether you are a doctor, lawyer, teacher, first responder or are in the military, investing in real estate is a smart decision that creates freedom for you to pursue your passion.

In this episode of Real Estate Investing for Professional Men and Women, I want to go over the three primary types of real estate investing that you could choose to pursue. These include flipping houses (which you probably know from those countless house-flipping TV shows), buying and renting properties, and wholesaling. In the episode, I explain these three methods of investing, their benefits and drawbacks, and I go over the basics of each.

Please keep in mind that I always advocate for investing your own money, avoiding shady or morally questionable investment practices, and I steer you away from those no-money-down methods you’ve probably heard about. Ethical investing isn’t just the right thing to do, it also helps you avoid risky investment behaviors that can cost you in the long run. 

What’s the difference?

The three methods of investing in real estate are each distinct and very different from one another, and each offers pros and cons to consider. Flipping houses is certainly the most flashy, glamorous and fun. You buy a fixer-upper in a great neighborhood for less than what comparable properties in the neighborhood are going for, make cosmetic and functional improvements to the home to increase its appeal and bring it up to the neighborhood standard, and then sell it for more than what you invested in it. That’s great on paper… if you’re looking to make real estate be your primary job. Fixing houses is costly, time-consuming, or both, and flipping is very subject to the market’s whims. Flipping is a risky proposition if the market slows down or worse, if the economy crashes.

Then there’s wholesaling, where you make an offer on a property and get it under contract to sell, then you sell the contract itself for an assignment fee so that the other party can take over your agreement to purchase the property. The good thing is that wholesaling doesn’t require much money to get involved in.  However, the downside is that wholesaling is very time-consuming and only results in a one-time profit, since you never actually take ownership of the property. Wholesaling is fine if you don’t have any other options and lack the cash on hand to go with another investment route, but it doesn’t work well for a busy professional whose focus is on their primary business.

And Then There’s Rentals

Rentals are my favorite way to invest. Rentals are hands-down the key to growing your wealth through real estate. Not only are you actually purchasing and taking ownership of a property, giving you the freedom to resell the property later, but you’re actually creating a continual monthly source of income from your tenant. Rentals are always an option and are mostly insulated from the constant real estate market fluctuations. If anything, when the market is down more people end up renting than buying. Residential rentals are the steadiest and least vulnerable sector in real estate. 

Of course, even with rentals, there is still an element of risk involved. You’re either going to be responsible for unclogging toilets and fixing air conditioning units or you’re going to have to hire someone to do it for you. And there’s always the risk that a renter will miss their payments. But in the grand scheme of things, the positive aspects of rental properties far outweigh the negatives, and as long as you own a rental property you can keep drawing monthly income from it. What’s not to love about continual, ongoing income?

Want to hear more? Listen to this podcast here.

The Success of a Young Investor

One of the common concerns that people raise about getting started in real estate is the idea that it’s too difficult to get into the market. Maybe they believe it costs too much money to get started investing, or maybe they think that real estate is too hard to learn to do properly. Maybe they are concerned that it takes too long to really get rolling and see returns on their investment.

That’s why I want you to meet Diego Corzo. Diego is a remarkable young man. At 28 years old, Diego now owns eighteen units spread across three states. He is a successful real estate agent, investor and motivational speaker who has built up his investment portfolio in less than five years.

Diego has also had to deal with extra challenges that most investors never have to face. As a Dreamer and DACA-recipient, Diego wasn’t able to do something as basic as legally work or obtain a driver’s license until he was well into his 20s. However, through perseverance, dedication and a drive to learn, Diego has been able to overcome these challenges and build a thriving business and an impressive investment portfolio.

In this episode of the Real Estate Investing for Professional Men and Women podcast, I talk with Diego about his drive to succeed, the investment strategies he has used to start and grow his portfolio, and some of the successes he has been able to achieve with his investments.

Starting Out by Hacking Houses

Diego graduated in the top 1% at Florida State University and went on to a position as a software developer, but it wasn’t long before he realized that corporate work wasn’t for him. After reading the influential book Rich Dad, Poor Dad, Diego decided to pursue his passion for real estate. 

Diego got started by using a strategy called “house hacking”. House hacking is when you purchase a multi-unit property (duplex, triplex, etc.), reside in one of the units and then use rental income from the other unit(s) to pay for the entire property. This strategy allowed Diego to live rent-free, own his first property, and use the money he otherwise would have put toward housing expenses to fuel further investments. Diego is a shining example that anyone can get started in real estate using smart strategies that fit their circumstances.

A Dreamer with a Dream

As an undocumented immigrant brought to the United States when he was very young, Diego has had to adapt his investment strategies to an uncertain future. Investing in properties and waiting for them to appreciate in value wasn’t a viable strategy for Diego, so he decided to focus on monthly cash flow instead. Bringing in steady income has allowed him to further expand his investment portfolio and has set Diego well along on the path to financial freedom.

Diego Corzo shows us that many of the common concerns potential first-time investors experience are able to be overcome using smart strategies. Diego was young, inexperienced, had limited start-up money, and had his status as a Dreamer working against him, but in just a few years he has been able to rapidly grow his investments alongside his work as a real estate agent. Diego took a chance on himself and it has truly paid off.

Want to hear more? Listen to this podcast here.

Maximizing Profits and Reducing Risks

Any smart investment strategy needs to adapt to the market and grow with your investment business. As you scale, you may find yourself needing to hire help to manage your investments. And as you get more comfortable with investing, the opportunities for investing in new and bigger projects will become available to you. But to grow effectively, you need a strategy in place for expanding while mitigating risk.

Recently, I had a conversation with my friend Gary Jonas. Gary is the president and principle of HOW Property Group, a multi-faceted organization that works in many aspects of property development and real estate. Gary started in real estate after reading the book Rich Dad, Poor Dad, and over the years he has been able to expand his business from one-off investments in single-family homes to six different revenue streams.

Gary believes in buying and holding properties to generate long-term rental revenues, and as his business expanded he realized that the returns for multi-unit properties far exceeded that of single-family residences. Moving into commercial real estate was a cornerstone of Gary’s success and it enabled him to grow his business in a way that single-family homes wouldn’t have allowed for.

In our episode of the Real Estate Investing for Professional Men and Women podcast, I speak with Gary about his investment strategies, some case study investments he has made that turned out to be major wins, the importance of mitigating risk as much as possible, and the impossibility of attempting to “time the market”. 

More Doors Equal More Profits

At a certain point in Gary Wilson’s investment career, he realized that the potential profits from multi-unit properties far exceeded that of single-family residences. As with any investor, Gary was initially nervous about breaking into a new niche, but he discovered that it was actually easier and less complicated to invest in commercial properties (defined as 4+ door properties) than to stick with smaller one, two or three-unit properties.

By moving into a more profitable market, Gary was able to expand his investments and fuel the growth of his businesses. What started as a small mortgage company has now grown to a six-business organization with multiple sources of cash flow. This explosive growth wouldn’t have been possible if Gary had not recognized that his investments needed to scale up and taken the opportunity to do so.

Dealing With Downturns and Mitigating Risk

One of the important points Gary raised during our conversation was that he was able to survive and even profit during the 2008 real estate crisis. As Gary said, when the market was down he chose to sell his assets and buy still bigger assets. Since the market will inevitably fluctuate and recover over time, Gary was able to buy larger real estate assets during the down period and then profit heavily when the pendulum inevitably swung back in the other direction.

This strategy is safer and more effective than attempting to “time the market”. Timing the market is next to impossible, so a far more effective risk mitigation strategy is to plan for a downturn rather than trying to pull out of the market before it hits. As Gary has shown, taking a long view of real estate rather than being reactionary to the market can truly pay off in the end.

Want to hear more? Listen to this podcast here.

Leaving a Legacy of Love

As you know, I strongly believe in investing in real estate in a manner that is honest and ethical. This means being fair in our dealings, but it also can mean using our financial success to give back to the communities in which we live and invest.

Not long ago, I had a conversation with my friend Ken Wimberly. Ken is an entrepreneur, business leader, real estate investor, husband and father. Ken has used his success and his businesses as a way to better the lives of others, both through his Laundry Luv chain of laundromats and through his Legacy of Love digital journaling platform. 

Ken is also a living example of one of the recurring themes that has appeared throughout the Real Estate Investing for Professional Men and Women podcast; that is, Ken has used his real estate investing success as a platform upon which he has been able to pursue his business interests and build up his chain of laundromats. For Ken, real estate isn’t the endgame, rather it is a wealth creation tool that allows Ken to use his wealth for other pursuits.

In our episode of Real Estate Investing for Professional Men and Women, I talk with Ken about his pre-real estate career, how he got into real estate in the first place, and how he has been able to use his real estate investing as the financial cornerstone of his other business pursuits.

Not all deals are created equal. And just because a deal looks great on paper and will benefit your profitability, that doesn’t mean it’s a good deal. In fact, monetary concerns aren’t even the most important thing to look for when evaluating a deal. Focusing solely on the money is a great way to have a deal sour partway through the process, or worse, blow up in your face completely after the ink is dry.

Using Real Estate as a Stepping Stone

For some investors, real estate is its own goal. For them, real estate investing serves as their primary business and sole income generator. Often, these are the investors who are big into the fix-and-flip business or get started using one of those “no money down” strategies that you’ve no doubt heard of before.

That isn’t the case for many of us, however. Many investors are professionals who already have a primary business or career, and they are looking to real estate as a way to grow their wealth to be able to pursue other interests. For Ken Wimberly, real estate allowed him the ability to launch his Laundry Luv business. He is an active real estate investor who invests small amounts into many projects, allowing him to focus the majority of his attention on his primary businesses. This flexibility is exactly what makes real estate such an ideal investment strategy for professionals.

Pursuing Dreams and Sharing Love

Ken Wimberly has used his real estate investments as a financial springboard to fuel his Laundry Luv chain of laundromats, as well as his Legacy of Love digital journaling platform. In both cases, Ken wants his work to have deeper meaning and to touch lives. For his laundromat business, this means creating clean, welcoming locations with children’s play areas and picnic tables that will double as classrooms to teach people financial independence, assist them with taxes, and even tutor their children.

Ken created his Legacy of Love platform as a remarkable way for parents, grandparents and others to be able to create a lasting digital journal to share with the children in their lives. Legacy of Love allows these parents and grandparents a simple way to record notes, messages and memories that can be enjoyed across generations. Ken is using real estate as a way to fund these incredible efforts, showing that real estate doesn’t have to be its own pursuit and can instead be a wonderful companion to your other interests.

Want to hear more? Listen to this podcast here.

The Secret to Finding the Perfect Property

In the latest “solocast” episode of the Fueling Deals podcast, I discuss the steps I use in my own work, as both an investor and real estate advisor to my clients, to find the right property in the right location.

Between the sometimes overwhelming number of potential leads at your disposal and the wide variety of price ranges, features, locations and property types to consider, it can be challenging to find a property that fits all of your investment criteria and that can make you money no matter if it’s a fix-and-flip or a rental.

On this episode of Real Estate Investing for Professional Men and Women, I go through each of my twelve essential steps and show you the exact process I use to narrow down an intimidating list of a hundred or more leads to the perfect property.

Getting Started the Right Way

The first step is to determine what assets you have available to you, what your goals are, and what type of deal (fix-and-flip, rental, etc.) will best fit your strategy. Once you have an idea of what you want and what you have, now you can begin looking at properties that match. What I do can generate a hundred different properties in your area that satisfy your needs.

Once you have a list of leads, one of the most important things you can do to minimize headaches is to follow steps in the correct and most efficient order. Why go out looking at a hundred properties in person, when you won’t be buying 99 of those properties? Instead, use the process of elimination to remove as many properties from your list of leads as possible before you ever set eyes on these homes. First, you’ll look at the numbers and eliminate any property that isn’t at or below market value for the neighborhood. Streamlining your list by eliminating any property not favorably priced will knock out a huge chunk of your list of leads, and that’s the goal.

Looking Closer

Once you have a more manageable list of leads, now you’ll start comparing each of those homes to similar homes in the neighborhood. If all the comps in the neighborhood have a driveway, eliminate any lead that doesn’t. Your goal is to streamline down your list to the most homogenous properties. Only after you’ve done this will you physically drive to and view the remaining properties.

Remember, at each step your goal is to knock out more houses until you have a list of finalists, almost like a reality TV competition. By continuously paring down your list of leads, eventually the cream of the crop will rise to the top, and that will determine which property you should make an offer on. I hope you find this strategy helpful, and if you’d like to learn more about my methods and take a deeper dive into the twelve steps I use, please listen to the podcast episode. 

Want to hear more? Listen to this podcast here.