When people talk about real estate investment, there are many different ways to actually make it happen – and it all depends on what you want for your future. For me, real estate investment is a long term strategy, not a way to make a quick buck. It’s not like I drive around in a fancy car blowing money left right and centre either – I keep my day job, save as much as I can and reinvest my income from real estate investments to boost my financial position.
The old technique of buy and hold
I invest in real estate for passive income – and have a ‘buy and hold’ approach for the long term. I don’t expect any hand outs in my retirement – and fully expect to have to stand on my own two feet when I can no longer go to work every day. For this reason I invest in real estate – good properties which are positive cashflow, meaning that I get money in my pocket from those properties. I stay away from negatively geared properties, because I don’t see the point of taking money from my pocket just so I can reduce my taxable income. Taxes are a part of life, and any scheme to avoid it are a waste of time and a massive contributor to stress.
It makes much for sense to buy cheap, good properties which will return a good rental income, enough to pay for the house plus a bit more. After a while these properties pay for themselves, and you are then the full owner of great real estate which you haven’t paid much at all for – apart from any initial deposit that is. Of course, this all depends on having good tenants and avoiding the horror stories that landlords fear – but they are beat up out of all proportion.
What I do know is that occasionally you will take a hit on an investment and lose some money – it’s just the nature of investing, and not just in real estate either. It’s the case in buying shares and other investment strategies too – there is no such thing as a sure thing. All you can do is make sure that you give yourself the best chance possible to profit.
Flipping houses? No thanks…
Flipping houses is quite popular, and has been for a while, but it’s not my cup of tea. There’s too much stress involved and when you reach retirement age, after a career of flipping houses, you have nothing to show for it. Sure, you might make a little money between now and then flipping real estate, but all you end up with is cash. If you follow the buy and hold investment technique then you at least have a whole bunch of properties you can continue to earn money from in retirement. On the other hand, making money in real estate flipping properties is just too much unnecessary hard work.
While there are a bunch of different investment techniques in real estate, there is none that gives me greater comfort than buying and holding. Every property that I buy is then added to our portfolio and we add to the amount of passive income that falls into our pocket every month. It’s a very comforting feeling, let me tell you. It sure is a lot better than scrounging to find a good property to buy at a hot price and then try and off-load it for a better price to make some quick bucks.