Welcome back to the third episode of our special series, Afford Anything Presents: Invest Anywhere.
Invest Anywhere is a new monthly series that runs on the first Friday of every month. It outlines the information you need to invest in real estate remotely.
Many of you would like to invest in real estate, but you live in an area with a high cost of living. (Most important, California and New York). Homes in your city are very expensive, and they provide lackluster returns.
You can invest in a low-cost area like Cincinnati, Indianapolis, Omaha or Wichita…but how? This looks terrifying.
We are here to break down that fear, piece by piece, by sharing our knowledge and experience.
The Invest Anywhere series is dedicated to providing you with the guidance you need to make smart, confident choices about out-of-state investing.
It’s co-hosted by Benny (Paula) and respected real estate investor Sonny Rao, who has experience in everything from buy-and-hold rental investing to (accidentally) wholesaling. I have been able to manage both short and long term rentals. It owns multiple homes, units, and even a mobile home garden.
Join me in this episode to talk about a variety of strategies that will help you make money in real estate.
In today’s episode, we discuss six strategies that investors use to make money in real estate.
We begin by creating a framework or mental model that defines strategies from tactics.
Imagine a tree. The roots of the tree represent your values (such as freedom). It all starts from this root structure.
Moving to the top, we see the base of the tree that represents your principles. These are shaped by your values. (Example: If freedom is a value, then prudent management of money may be a principle.)
Further, we find the tree trunk that represents your goals and objectives. FINANCIAL INDEPENDENCE/FIRE may be a goal that flows from the value of freedom and the principle of prudent stewardship of resources and capital allocation.
The tree trunk extends into thick tips, which represent your strategies. This is what you do. (More on this in a moment).
These limbs then form smaller branches, which represent the tactics. This is how you do what.
Finally, the branches form an umbrella of leaves, which represent products and services (tools, software, applications, business entities).
Leaves are the most prominent and visible parts of the tree, thus, real estate beginners often ask questions at the leaf level first. (For example, many people ask, “Should I hire a property manager?” or “Should I put my property in an LLC?”)
But these leaves are also the most transitional part of the tree. These are details that are formed only after the roots, trunk, limbs and branches are created.
Today’s episode covers six *strategies* for investing in real estate, which means we’re talking about the limbs of the tree.
We organized these six strategies into a spectrum that ranges from “more passive” to “more active.”
Income-producing activities that involve handing your money over to someone else — such as investing in REITs or using crowdfunding platforms — occupy the “more passive” side of the spectrum.
Earning money through your (significant!) efforts, including wholesaling and flip-flops, occupies the “more active” side of the spectrum.
The hybrid between hands-on and laissez-faire approaches – including private lending and buy-and-hold investment – occupies the middle ground.
In today’s episode, we explore the advantages and disadvantages of each of these six strategies.
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