31 Aug Flip for quick turn or pass income Craig Feigin explains.
“The type of real estate investment that appeals to you,” expert advisor Craig Feigin tells us, “depends on the type of person you are.”
Fortunately, real estate is a broad investment field with a wealth of opportunities for every personality type.
Let’s look at a pair of opposite types, active / passive and quick turn / long haul.
The active type wants to be very hands-on with his investments, and feels good when he is putting plenty of energy and even “sweat equity” into them.
Many types of investments don’t allow for that kind of get-up-and-go. You can buy and sell stocks, but what else can you do with them? Not much.
But many starter-investors have bought a small rental property, maybe just two or four units, that needed work, and turned that into a profit generator but acting as owner-manager-restorer-maintenance guy-you name it.
This becomes a kind of (very serious) hobby, and you get out what you put in.
The passive type wants in on the real estate action he has heard about, but has other things to do with his time than handle a wrench or deal directly with tenants. That’s just not in his wheelhouse.
For him, a REIT (real estate investment trust) might be the perfect vehicle for his ambitions. A REIT is like a mutual fund for real estate. A REIT manages a portfolio that may be pretty well diversified, or more concentrated in a single geographic area or real estate type (apartment buildings, strip malls, office buildings, industrial parks). REITS are good income producers because they are required by law to pay out at least 90% of their taxable income as shareholder dividends.
How about antsy investors vs. patient investors? We’ve got to admit to begin with that real estate, rooted as it is in land that doesn’t move, is a heaven-sent investment opportunity for those with an eye for the long haul. It goes up steadily in value over the years, with even the occasional downturn ultimately registering as no more than blip in a climbing line on the graph.
So if steady-as-she-goes is you, buy it, hold it, savor it, feel its value grow. Any competent real estate advisor can help you with that.
But if it’s got to happen for you now, real estate can still figure in your plans, although, as Craig Feigin warns, “there are going to be some lessons along the way.”
Fix-and-flip is a preferred method for the real estate investor in a hurry, and speaks to the hand-on guys I mentioned earlier as well. The basic idea is simple: Buy a distressed property at a low price, fix it up fast, and sell it at a nice profit. All within a two-year window if possible.
This is not only a fast-paced, high-energy type of investing, but requires steely nerves as well. Because there is guesswork involved, and occasionally you will guess wrong, perhaps just breaking even on a deal – the kind of “lesson” that Craig Feigin refers to.
But for those with the gumption, fix-and-flip pays out sooner rather than later, and when you guess right and see that handsome profit for your efforts, it’s a sweet moment indeed.
Real estate investing, in short, offers something for everyone.