- Scale is relative for illustrative purposes
- There are generalizations. Investment experience varies by investor
- Not all investment strategies shown
|RESIDENTIAL RENTAL TURNKEY
Buy single family, duplex, triplex, 4-plex in ready-to-rent condition. Hire property manager to handle leasing, repairs, makeovers, and maintenance.
|RESIDENTIAL RENTAL SELF-MANAGED
Buy property, fix up as needed, find and screen tenants, handle on-going maintenance. Can outsource some aspects but is main contact for tenant.
Get a property under contract and sell to buyer for a profit (think wholesale selling to retailers). Applies to residential and commercial properties
Buy a fixer (any type of property), make small to large scale overhaul (do it yourself or hire contractor), resell for profit.
Size here is relative to large apartments. It is commercial property, requires more due diligence. Structure and systems more complex than residential. If self-managing, need more expertise than if hiring property manager
As size increases, there is simply more to manage. May or may not be more complex than smaller apartments, but there is more of everything (physically, paper). If self-managing, you’ll need more time and experience
The graph above is one way to show breadth and depth in real estate investing. Many strategies and asset class exist and just within the few highlighted above, there are further subcategories. We kept this graph relatively simple by limiting strategies in housing, which is Millan’s specialty. Housing can further break down into holding, flipping, wholesaling, etc. It’s more intuitive and where many investors start.
There are several things to take away from this graph and the definitions:
1) There is so much variety that no one can be an expert in all of this. So beware of anyone touting that they “do it all”
2) With so many strategies and asset class, any investor interested in real estate investing can find something that fits with his/her objectives, preferences, and risk tolerance. Better yet, it is possible to do it without bank financing if credit was an issue or simply not desired; and one can start with little or no money.
3) Within the buy-and-hold strategy (rentals), there is the full spectrum of self-management to property management. More passive than 3rd party management is to invest as a passive equity or debt investor.
So, let’s just say you are interested in real estate investing… what kind of investor would you be?