Not only are there multiple types of properties and areas in which you might invest-fortunes have been made in single families, apartments, mobile homes, commercial properties, raw land, options, mortgages, great areas, awful areas, middling areas, and dozens more-but there are also multiple ways to make each type of property make money.

Most people are initially familiar with just one or two of these strategies. Renting is certainly the one that comes to mind for most people; fixing and reselling is another fairly well-known strategy. But these are just two of the possible ways to make properties make money-and in some ways, they are the two most risky and difficult.

The problem is, most people are not cut out to be landlords. They don't have the time, patience, or personality to deal with the hassles that tenants cause. And even fewer have the money and skills to successfully renovate and resell properties, which is cash-intensive and depends on the investor's knowledge of inspection, estimation, rehab, and sales. And although landlording and "retailing" are both extremely profitable for the right people under the right circumstances, they create totally different types of profit: renting properties results in long-term tax-advantaged cash flow and wealth building, while retailing creates a large, one-time, highly-taxed cash profit. So not only is every strategy different in the knowledge, resources, and skills it requires; each strategy is different in terms of the financial goals it meets.

That's why it's so important to pick your strategy wisely. And this means deciding before you start what it is you hope to gain from your real estate investments.

Is it cash to pay off debt, or build a fund for downpayments, or buy a dream? Is it income, for retirement, or to replace your salary, or simply to realize a higher standard of living?

Is it tax benefits, to offset a high working income? Is it appreciation, to build wealth?

And at the same time, it's important to take stock of your own assets and liabilities, so that you can match your skills and personality and resources to your strategy.

Do you have cash and good credit, or are you lacking in one or both of these areas? Do you have time to commit to your investing, and if so, how much? Do you have experience in renovation? Negotiation? Sales? Are you patient? Good with people? A great manager? Fearless? What's your risk tolerance?

Each of these resources is important for certain strategies-and completely unimportant for others. And, of course, each can be obtained with study and experience. But knowing where you're coming from and where you want to end up are crucial for choosing a path that will allow you to make the kind of money you want to make in real estate-and make it as easily as possible.

Source: www.regoddess.com

 

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