Welcome to the third episode of our special series, Afford Anything Presents: Invest Anywhere.
Invest Anywhere is a new monthly series that airs the first Friday of every month. It presents the information you need to invest in real estate remotely.
Many of you want to invest in real estate, but you live in an area where the cost of living is high. (Ahem, California and New York). The houses in your city are prohibitively expensive and offer mediocre returns.
You could invest in a lower cost area like Cincinnati, Indianapolis, Omaha or Wichita… but HOW? It sounds terrifying.
We are here to dismantle this fear, piece by piece, by sharing our knowledge and experience.
The Invest Anywhere series is dedicated to giving you the guidance you need to make smart, confident choices about out-of-state investing.
It is co-hosted between myself (Paula) and esteemed real estate investor Suni Rao, who has experienced everything from buy-to-let investment to wholesale (accidentally). She manages short-term and long-term rentals. It has homes, multi-units and even a mobile home park.
She joins 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 investors use to make money in real estate.
We begin by establishing a framework, or mental model, that delineates strategies from tactics.
Imagine a tree. The roots of the tree represent your values (eg freedom). Everything starts from this root structure.
Moving up, we see the base of the tree, which represents your principles. These are formed from your values. (Example: If freedom is a value, then wise money management can be a principle.)
Higher up is the tree trunk, which represents your goals and objectives. Perhaps financial independence/FIRE is a goal, emerging from the value of freedom and the principle of wise management of resources and allocation of capital.
The trunk of the tree grows into thick branches, which represent your strategies. That’s what you do. (More on that in a moment).
These members then form smaller branches, which represent tactics. This is how you execute the what.
Finally, the branches form a canopy of leaves, which represent products and services (tools, software, applications, business entities).
The leaves are the most prominent and visible parts of the tree, and therefore real estate newbies will often ask questions about the leaves first. (For example, many people start with the question “should I hire a property manager?” or “should I put my property in an LLC?”)
But these leaves are also the most transient parts of the tree. These are details that are formed only after the establishment of roots, trunk, limbs and branches.
Today’s episode covers six *strategies* for investing in real estate, which means we’re talking about the branches of the tree.
We’ve organized these six strategies into a spectrum ranging from “more passive” to “more active.”
Income-generating activities that involve handing over your money to someone else — like investing in REITs or using crowdfunding platforms — occupy the “more passive” side of the spectrum.
Earning money from your own (important!) efforts, including wholesaling and flipping houses, occupies the “more active” side of the spectrum.
And a hybrid between a hands-on, hands-off approach — including private lending and buy-and-hold investments — occupies the moderate middle.
In today’s episode, we explore the pros and cons of each of these six strategies.
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