In residential investment real estate, there are three basic ways to invest.
- Wholesale a property to another investor.
- Rehab a property and sell it to a retail buyer.
- Buy and hold onto a property as a rental.
Because of where the market currently is, and the high supply of houses and low supply of qualified buyers, the 2nd investment strategy of rehabbing and selling a house is currently not the most profitable investment strategy available to investors. It is also not the best way to maximize your long term wealth in this market.
Seasoned investors are still rehabbing properties and making money, but it is much more difficult to do this during current market conditions.
Who is making the most money in this down market?
The people making all the money in this market are the investors that have an income stream coming in from a different source other than real estate.
This cash flow alows them to safely leverage their money and use investment strategy 3: buy and hold rental properties.
Over the long term, the savy new Saint Louis real estate investors that begin their careers by exclusively buying and holding onto rental property are going to make themselves millionaires!
The key to implementing this strategy is to first have a steady cash flow coming in. This will allow you to overcome any short term hurdles that you may encounter along the way (furnace breaks etc.)
So, if you are new to investing in Saint Louis, and you are thinking about leaving your job. DON'T DO IT!
This is not the market that you want to learn how to rehab houses in.
This is the market that you want to become a landlord in. And, you can do that if you still have a job giving you a steady amount of cash flow.
The first investment option is to wholesale properties. If you are new to investing, you probably have encountered amny poeple selling you information on this.
What these people aren't telling you is that new guidelines are in place that make it more difficult to wholesale properties.
The real etate gurus are making their money selling you products, not by investing in real estate! If they were really good at wholesaling, and making the money that they claim you can make, wouldn't they be doing that instead of teaching you how to invest in real estate!
What they don't tell you is that if you are able to make it and become a successful wholesaler, it can take between 2 to 3 years to develop a marketing system that gives you enough leads to earn a decent income. Especially because when you are new you are going to mishandle many of the leads that you receive (even the good ones).
New St. Louis REAL ESTATE INVESTORS
If you have a job, DON'T QUIT IT.
Suck it up and think about the big picture: you are going to maximizing your long term wealth by first establishing a rental portfolio.
Then, once you do this the supply of buyers will have probably rebounded and you can now invest full time in real estate!
DON'T LISTEN TO THE REAL ESTATE GURUS
This is a hard profession, and not cut out for everyone. Try investing part time first until you have some experience and can then make an educated decision on whether or not this is what you want to do with your life.
Good luck as you begin your investment career! If this blog has helped you in any way, or if you even disagree with anything in it, please let me know with a comment on it at the original place the blog was written.
You can also reach me at one of my websites: STL Real Estate if you would like to discuss investing further.
My last blog goes into detail about the Saint Louis residential market.