Real Estate Investing Or Landlording

Real estate investing is the classic wealth vehicle that has taken people from living hand to mouth to the pinnacle of wealth.

It's the vehicle of choice because it's accessible to all of us. Everone has a least rented a house or apartment, and most of us have bought a house. So knowing what it's like to be renter or homeowner we have first hand knowledge of our customers when we set out to be real estate investors.

The classic real estate investing model is buy a bunch of houses, rent them out and in 30 years the mortgages will be paid off, the properties will have at least doubled in value, the rents will be twice what they were when you started ... with no loan payment.

The goal sounds inspiring. Imagine having 10 properties you bought 30 years ago, each for $80,000, now be worth $350,000 apiece as a result of a average annual appreciation rate of 5%. You would have a portfolio worth about $3,500,000. Monthly rents, on the low side, of $1,200 per house would give you gross monthly rents of $12,000. After T&I you probably put $9,000 in your pocket.

I think you would agree this is an extremely modest goal, but what a payoff!!

What a payoff indeed ... for those who actually stick with it. You see there's a problem with the above scenario, and that is the early years are really tough.

Cashflow is slim, expenses are high, and most investors who take this on don't make it through.

They run out of cash.

The short-term solution is to change your focus from buying and holding to quick-turning houses for cash. Quick-turning houses, getting them under contract super cheap and flipping them to another investor for $5-20,000 or more will take care of your cashflow needs today while you hold your rental properties for long term growth. This is great ... money, cash!