Hey there, fellow real estate enthusiasts! It’s Ryan from Propelio. Every Wednesday, we dive into real estate strategies with Grant Kemp from Creative Cash Flow. Today, let’s talk about customizing your profits to make the most of your deals.
Understanding Your Strengths and Weaknesses
One of the most common questions from newcomers is, “What’s the best strategy to start making money in real estate?” The answer? It depends on your unique situation. You need to play to your strengths and offset your weaknesses.
Think about what you bring to the table. Do you have time, money, or knowledge? These are the big three assets in real estate. Your combination of these will guide your strategy.
Finding Your Niche and Expanding It
When starting, it’s essential to find a niche that suits your strengths. Once you’ve mastered it, don’t stop there. Open your box and explore other strategies. Real estate is a diverse field with endless possibilities. Getting creative outside your initial niche can lead to more significant profits.
Customizing Deals Based on Your Assets
Let’s break down some specific strategies based on different scenarios. If you have cash, life gets a bit easier. You can engage in fix and flips, buy-and-holds, or even lend capital. But what if you don’t have cash? Then, wholesaling, owner financing, or joint ventures (JVs) might be your path.
Decision-Making Based on Deal Percentages
In real estate, different deal types work best at different acquisition percentages of the after repair value (ARV):
- Fix and Flip: Ideal if you’re acquiring below 75% of ARV.
- Wholesaling: Works well if you’re between 75% to 80% of ARV.
- Buy and Hold: Typically fits within 80% to 85% of ARV.
- Owner Financing: A fantastic option even if you’re up to 100% of ARV.
- Short Sales: Applicable if you’re beyond 100% of ARV.
If you land a deal at 70%, you can go any route – fix and flip, wholesale, buy, hold, or owner finance. But if you’re at 87%, your only viable strategy is owner financing.
Personalizing Your Strategy
Customize your strategy based on what you currently need. If you have plenty of cash but no long-term investments, focus on finding good cash flow properties. If you have lots of deals but lack funds, partner with someone who has capital.
Example: Recognizing Opportunity
Stay alert to subtle opportunities. For instance, a conversation with a neighbor revealed they own multiple properties free and clear but lack the capital to develop them. This presents an opportunity for a JV, where your access to capital can turn their static assets into a profitable venture.
The Importance of Networking
Networking is vital. Use events and platforms to find and connect with people who complement your strengths. This community approach helps you leverage your skills and assets to mutual benefit.
Conclusion
In conclusion, the key to maximizing your profits in real estate lies in customizing your strategies to align with your unique strengths and resources. Whether you have time, money, or knowledge, there is a niche for you to excel in. Start by identifying your assets, choose a strategy that leverages them, and then expand your repertoire to explore new opportunities.
Always remain flexible and adaptable, recognizing opportunities when they arise and building a robust network to support and enhance your ventures. By personalizing your approach and collaborating with others, you can turn every deal into a profitable venture. Happy investing!
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