Real Estate Investing, Not Trading

November 23, 2013 — 2 Comments

In real estate investing, it is important to understand the difference between trading, and investing.  All too often, the real estate investing industry is viewed as “flippers”.  Not just fix and flip, but wholesaling too.  Although I practice both of those strategies, I know it is not investing, and that is OK.  Investing is putting money (or time) into something, for a long term investing.  Flipping and wholesaling is simply trading your time for money.  It, in simplicity, is a job.

Real estate investing is, in my opinion, when you create something of value, that will provide a return over time.  I like to say that my business is creating cash flow, with an asset based that will increase over time.  My strategy is simple.  I will explain.

I am full-time in this industry, so I have to pay bills somehow.  I can’t keep everything I buy.  Some of it must be sold, to produce revenue, in order to be distributed for my wife to spend.  OK, that was a joke, but you get the point.  Kids, families, and other personal expenses can add up.  So, let’s say I buy ten houses.  Of those ten: I will wholesale five to six, buy – rehab – and sell three or four, and keep one or two as a rental.

My rental strategy is different from what most teach.  I don’t go for cash flow now.  I actually don’t want it!  I like to leverage the real estate on short-term debt, in order to reduce the principal rapidly.  I actually take zero cash flow from my rentals.  Our goal is to own them free and clear.

real estate investing

Think of it like an oil well, that never goes dry.  If you put the right amount of contingencies and reserves in place, you can create an endless supply of cash flow from one of life’s basic necessities, SHELTER.  That’s right.  Food, water, and shelter are the best businesses in my opinion.  When inflation hits, people still need these things.  i have no desire to be a farmer or sell water, so I rent houses out.

My advice, is to get them paid off, but don’t pay cash.  Use leverage, to maximize your efforts, and get where you want to go quicker.  If you are looking for a way to finance your portfolio, check out what I am doing with B2R Finance.  If you are interested in learning more about how to streamline the financing on a rental portfolio you already own, fill out this form.

So, what do you think?  What is your strategy?  Please comment below!

TimHerriage

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I started at the bottom, worked hard and am now one of the top Real Estate Investors in the business. I learned from some of the best, excelling early as an acquisitions manager and then moved on to partner with other skilled investors to create my own portfolio of productive rental properties and later to mentor others to do the same. I am still actively involved in Real Estate, giving a current awareness to the training I share. My wife, Jennifer, and I live in Rockwall with our sons, Alex and Will.