Does it make sense for investors to embrace more than one real estate exit strategy at a time?
Real estate investors have traditionally been very selective of their chosen investment strategy. Specializing in one exit strategy awards them the opportunity to become an expert in that particular field. However, the debate as to which strategy is the best continues to unfold in today’s market. In the end, investors agree to disagree in regards to the best exit strategy.
Wholesalers, flippers, buy and hold landlords and debt investors all have their own perspective on real estate.
Ironically, each strategy has proven it is capable of generating great incomes and building significant wealth. So it’s not really a matter or right or wrong, but of choice. Some real estate investors are certainly impressionable. Whatever they hear from a self-proclaimed professional is the law. However, when you really think about it, the best primary real estate investment strategy for any individual is determined by personal goals, talents and resources.
So what about mixing it up and engaging in several different real estate investment strategies at once? What are the dangers of such diversity and how can juggling multiple strategies actually be beneficial?
For those just starting out in the real estate investing business, diversifying can be an incredible challenge. Focusing on several exit strategies can not only be incredibly distracting, but it can prevent you from becoming an expert in one area.
Engaging in multiple exit strategies can be devastating to those who are not prepared to make the jump.
However, there are many excellent reasons for embracing more than one real estate investment strategy at a time. The benefits can be huge, if not critical for survival.
Just about any real estate investing strategies can be combined. Wholesaling mortgage notes can be balanced with fixing and flipping luxury homes. Building a portfolio of single family rentals can easily be paired with commercial real estate. Acquiring land can even work in conjunction with selling custom homes. Virtually any other combination is possible as well.
You may even want to consider offering additional, complimentary services. These can include moving, finance, auctions, home staging and more.
This is great, not only for diversifying income sources, but for steadying income through different real estate cycles. Additionally, it means balancing returns and cash flow while expanding networks.
Wholesaling houses can be used to bring in lump sums of cash while building up passive income from cash flowing rentals. In this example, flipping can also be used to generate those larger sums of capital to expand holdings and fund renovations. No matter which real estate investing niche you are in, using dual strategies maximizes more opportunities and increases overall returns.