Building a balanced portfolio that serves to reduce your taxes, utilize leverage and protect your hard earned savings is vital.
I’m going to show you the ways you can do all of these things by buying different types of residential property.
My philosophy is – “If you can’t make money with NO money, you sure can’t make money WITH money.”
In this video, I show you how to grow your business so you are eventually doing both.
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Read Transcript for “What Type Of Properties Should You Have In Your Long Term Portfolio?”
In this video, I’m going to tell you about what types of investment properties you should have in your portfolio and how to create cash flow to sustain your business with.
Joe: What types of investment properties should you be dealing in? Should you be doing long term or short term? Should you be doing quick flips? Should you be doing rental properties or lease options? There’s a place in your portfolio for all of these things, but what you want to do is find a balance.
Joe: Anybody that works in just one of these strategies isn’t going to be able to maintain themselves. If all you’re doing is long term investment strategies and you’re buying properties with cash, you’re going to run out of cash. Well, then you can switch to loans, right? But Fannie Mae only allows you to get 10 loans so you run out of loans to get. Then, maybe you go to hard money but it doesn’t become profitable anymore because you’re working with hard money and high interest rates, and a lot of times those types of deals don’t make sense.
Joe: So when you’re doing long term investment properties, once you’ve used up all of your available capital, your credit line at the bank and your home equity line to buy those properties (and it probably makes sense to use those things to buy long term investments because they will get you a good return and will be good long term strategies and will get you the tax benefits you need) eventually, you’re going to run out of money and you won’t be available to sustain that kind of investment for the long term.
Joe: So you have to do some other things with it. One, you can sell those properties to investors, but if you look at the earlier videos where I’ve talked about what investors are looking for, and if you’ve bought the properties that are investors are looking for, then you can go and you can turn around and sell those properties to investors.
Joe: But if you try to sell $200,000 – $300,000 properties to mom and pop investors, it’s going to be a lot harder for them to do that. And, if you start dealing with properties that are half a million or multi-million commercial properties, then you’re going to be dealing with a different type of investor – someone that may have a little bit more savvy than you going into this and may have a little bit more ability to negotiate a better deal for themselves, a worse deal for yourself, and so overall you end up coming out on the short end of the stick so it might have made more sense to stick with single family homes.
Joe: Now, I’m not saying that you can’t make some good money with multifamily properties. And, you can use all of the structures and different training that I have for you here – you can use those with multifamily 1 to 4 unit or you can use it with 100 unit buildings, and you can use it with commercial properties or strip malls – you can do it with any of those things – but that’s probably not the best place to start. You have to build the skill and the savvy to put that together with residential properties and then move onto the multi properties.
Joe: So, you have long term investments in your portfolio. It’s going to make a lot of sense to have that. I might have mentioned earlier that it makes more sense first to start with properties that are going to give you cash flow because your business isn’t going to be sustainable without cash flow. And, if you have long term properties that have mortgages on them, there’s going to be times when those properties are vacant, in which case you have to come up with the money out of your pocket to cover the costs. If you structure it the way I taught you and you got a lease option fee out of it, then you should have some money set in reserve for those vacancies when they occur.
Joe: But you want to be safe, and to be safe, you have to have cash flow. The only way your business is going to be really stable is by having cash flow. The way to do it is by doing these short term flip deals.
Joe: I prefer to see people get into doing the For Rent Method or flipping properties. All they’re doing is getting ahold of the property, controlling it, finding a buyer for that property, assigning the right to buy to that buyer, taking a chunk of money, passing that buyer to the seller, in and out of the deal – you don’t get a loan and you don’t spend any money. If you don’t succeed in finding that buyer, you haven’t lost a dime.
Joe: This is a wonderful way to create quick cash flow in short term investments. And if you standardize the process that you use to find these properties and to put them together and to turn around and sell them, which you can all do with the Push Button Method that I teach (PushButtonMethod.com) or you can be in my mentor program and learn the same things (ZeroDownInvesting.com) then if you learn those techniques then you can turn it into a business that produces money over and over again. Then, you turn that into a system and make it run on autopilot through automation and outsourcing. Then, you can step back and you’ll have the time to start looking at buying the long term investment properties. That’s the next thing that you’re going to go after.
Joe: You’re going to want both of those things in your portfolio but you’re going to want to do the cash flow first and the long term investments second. I hope that helps.