New Investors - Ways to Get Started Investing

Discussion in 'First Time Investors' started by Mary, Nov 30, 2015.

  1. Mary

    Mary Mary Hirsch (Admin)

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    If you are like many explorers in real estate investing, you are wondering where to start!

    Perhaps you are thinking of television programs of buying properties that need extensive work, getting dirt on your hands with a major rehab, then putting out signs and ads to entice homebuyers. Fortunately for those of us who are not experienced contractors, rehabbing is only one of many options for investing.

    There are a number of different avenues available to first-timers, that require different levels of effort, cash, experience and risk.

    Silent investor/partner
    Back a trusted, proven rehabber, let them do the work, and share in the profits.
    Your return will not be as great as the partner that is doing the work, but neither are the demands on you.

    Rehabber
    Returns can be high, but there are significant demands on your time, your cash, your effort and your understanding of every aspect of the project.
    Choose and purchase properties, manage the rehab project and also the marketing to find a homebuyer or renter.

    “Bird-dogger”
    The least risky but also the least profitable role in real estate investing.
    Some investors will pay someone a few hundred dollars for every property they locate and refer that turns out to be a good deal. What you earn is entirely dependent on the investor’s goodwill, but on the other hand, you risked only your time, not your money.

    Wholesaler
    Wholesalers find a property and negotiate a purchase contract, then sell at a small profit to a rehabber to actually complete the project.
    Ideally, the wholesaler will assign the contract to someone else to complete the purchase before closing, so they do not put up the purchase funds themselves. Instead, the rehabber will close on the contract negotiated by the wholesaler. In some cases the wholesaler will close and then sell to a rehabber. (We will have a more complete guide to wholesaling posted soon.)

    Landlord
    A well-managed rental property in the right location can be a great source of ongoing income. A landlord may acquire a producing rental, or may purchase a rehab property for a discount and prepare it as a rental. (The responsibilities and opportunities of a landlord will be the subject of future posts.)

    Hard money lender
    Hard money lenders collect a certain percentage on money lent, as much as 15% APR and more, regardless of the outcome of the project.
    Hard money lenders finance projects traditional lenders won't touch, so although expensive, hard money loans make projects possible.

    Over time, as they develop experience and success, most long-term real estate investors develop a combined strategy of several (or all) of the above roles. They diversify their income sources and opportunities.

    Each role has its place and its own risk-reward profile. We'll discuss these opportunities, cash requirements, risks and rewards in depth in future posts.


    If you are new to investing, which of the above roles are you thinking of for your first project?

    If you are an experienced investor, which role did you start with - and how many are you involved with now?

    Post your answers below, and watch to see what others have to say.

    Just below is the box “Write Your Reply”. Type in your answer and then click “Post Reply” to the lower right.

    Register to post your comment or question! We look forward to hearing from you.




     
  2. MG Green

    MG Green Member

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    I really don't know anything about contracting or rehabbing. What is the safest way to start into real estate investing?
     

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