Lifepoint Financial Design – LifePoint Financial Services – Mike Metzger Financial Planning

To many, investing in real estate can sound enticing, but it also may seem a bit scary. After all, you might not have a green thumb or know how to hammer a nail without serious risk of injury. I can promise you that I am definitely one of those people!

Real estate investing has gotten a really bad reputation! You often read about real estate investors who flip properties or rehab discarded houses with their bare hands. You’ll find no shortage of shows dedicated to people who turn horror houses into pieces of beauty. Open your social media app to real estate investing celebrities who brag about the return on investment and cash flow numbers based on the work and sweat equity poured into the house.

I know in my own personal journey, this thought of having to do it myself was deflating and exhausting. And, working with real estate professionals across the country, I discovered I was far from the only one who felt that way. Most of my financial planning clients don’t have the talent, desire, or time to put into the physical labor of rehabbing a house.

The fact is, there are many ways to be a real estate investor without ever needing to pick up a wrench. I would even go so far as to say, there are even smarter ways. After all, isn’t the saying “work smarter, not harder”.

Think about it, if you don’t have a passion for carpentry, then leverage that time to do something produces a bigger value to you, while getting the same end result. Yes, your ROI, cash-on-cash return…blah blah blah…might not be as great, but those are short-term calculations. Most real estate investors I know are in it for the long-haul of financial independence.

If you are in the position of wanting to get into real estate investing, but don’t have any desire to get into rehabbing, flipping, or any of the physical labor, then read about these other real estate investing strategies.

 Here are 3 real estate investing strategies that take much less effort:

 Turnkey Real Estate Investments

There are a number of turnkey real estate investment companies that exist. These are really great options if you just want to buy a property and get it rented out. You don’t have to do many of the tasks that are involved with traditional real estate investing.

  • No rehab
  • No repair work
  •  No market research
  • No searching for real estate agents
  • No return calculations
  • No searching for tenants (In most cases, the turnkey company is responsible for tenant placement)

Companies like REI Nation, a turnkey investment company, has a model and a method that they feel confident in. They only invest in markets they believe in and run all of the numbers for you. Their job is to make it as easy as possible to invest with them.

What do these turnkey companies get out of the deal? Well, they become the property managers and earn a portion of the rents in return. If they feel they can make it easy for you and are confident in the rental market, then those property management fees will be there for years to come.

Syndications

Real estate syndications can offer an affordable way to participate in larger real estate investments, without having to come up with all the money. Investing into something like a downtown condo building or a local hotel project would take a lot of money. Unless you are one of many investors pooling your cash together. That’s exactly what a real estate syndication is.

Basically, a group of real estate developers or knowledgeable real estate professionals do all of the research. Then those professionals raise the money to build the project through the help of raising and pooling smaller individual real estate investors funds together. As the individual investor, you typically receive an equity share and income component that is proportionate to the amount of money you contributed into the syndication.

It’s important to note that there can be complications to commercial projects and you need to do a fair amount of vetting of the syndication group and project.

Land Investing

We all know there is only so much land on this Earth. Land is a scarce resource to a growing global population. So, owning desirable parcels of land could be a lucrative strategy. It’s also much less costly than buying properties, because the property is the majority of the cost. The land is a smaller component to the real estate you buy.

Basically, as a real estate investor, you might look at population and migration trends. If it appears people might be growing to a certain area of a metropolitan, then you might start looking at land for sale in that region. Perhaps, a local vacation destination is growing in more widespread popularity and you think that land will become much more valuable. There are many reasons why being the owner of land can pay big down the line.

This strategy can be much more speculative and you need to pay attention to local and state laws that might limit the uses of land. However, it does offer portfolio diversification, less maintenance, and significantly less cost to start.

Disclosures:

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual

All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

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