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Determine the Right Style of
Real Estate Investing for you
By Nancy Spivey
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about Nancy Spivey
~~~~~~~~~~~~~~~~~~~~~~
 Real
estate is an industry with so many aspects that anyone can
find a profitable way to build wealth that is suited to his
or her particular talents and interests.
Should you specialize in a particular area? You can, but
you don't have to. Many people specialize in types of real
estate that generate positive cash flow: single-family houses,
apartments, or rooming houses. Others find a particular niche
and focus exclusively on that: rehabs and fixer-uppers, for
instance. You can choose to start with one type of real estate,
especially if you're operating with limited capital, and
expand into other areas as you generate cash and equity.
If you're relatively new to real estate investing, you have
to start somewhere. The following is a breakdown of how you
can get started based on your financial situation, your skills,
and your personal interests. Use this as a guide to determine
the best ways to invest in real estate, and some of the best
investment options, based on your individual skills, capabilities,
and interests.
1. Do You Own Your Own Home?
Yes: Consider ways to increase the value
of your property: renovations, additions, improvements.
Remember your home is an investment as well as a place
to live, if the improvements you make are attractive to
you, they will be to other buyers.
No: Unless you live with your parents
and plan to continue living with them, the first real estate
investment you should make is to purchase your personal
residence. If you're paying rent, you're paying someone
else's mortgage, plus you don't benefit from the appreciation
of the property.
2. Do You Have a Down Payment and Good Credit?
Yes: Consider bank financing. You can
probably qualify for excellent terms, and in addition you'll
build a business relationship with a lender that will be
beneficial in the long run.
No: Consider seller financing or lease
options. Sellers often are much more flexible in offering
terms to buyers with poor credit. In addition, work hard
to improve your credit rating, pay all your bills on time,
and work to pay down your debts. The better your credit
rating, the more readily you can get financing and the
easier it will be to invest in real estate.
3. Do You Have Carpentry Skills?
Yes: Consider rehabs and fixer-uppers.
Instead of paying others to do the work, you can do so
yourself, in effect you'll be paying yourself a wage in
addition to increasing the value of the property. Keep
in mind, though, that rehabs can take considerable time
to renovate, so make sure you have that time available.
No: Focus on buying rental properties,
on wholesaling properties, or on other investments where
your personal "sweat equity" is not required.
Or, find skilled craftsmen who can do the work for you
on rehabs or fixer-uppers.
4. Do You Like Working with People?
Yes: Consider buying and managing your
own rental properties. You'll save on property management
fees, and you'll build relationships with local lenders,
government officials, and craftsmen. You may even rent
to tenants who later will become buyers of other properties
you invest in. In addition, you can consider selling your
properties yourself instead of using the services of a
real estate agent.
No: If you invest in rental properties,
use the services of a property management firm. You'll
probably also want to use real estate agents to sell your
properties. Landlords have a number of interpersonal dealings
with tenants; if you don't like working with people, managing
your own properties will be frustrating.
5. Do You Have Solid Financial Management Skills?
Yes: Consider handling your own accounting
and bookkeeping. You'll have a better sense of the day-to-day
health of your business. On the downside, if your investments
are substantial you'll find you spend a lot of time handling
the clerical tasks necessary to run your real estate "empire." At
that point you may decide you're better off handing the clerical
duties to someone else while you focus on finding and making
great investments.
No: Educate yourself: attend seminars
or take classes. Or, utilize the services of an accountant
you trust.
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