Is real estate the perfect investment vehicle? No; there is not such thing.

 

Does real estate involve some physical labor? It can, if you choose to manage the properties yourself.

 

Is real estate investing (REI) for everyone? No; again, there is no investment that is right for everyone at any every point in his or her Lifetime Investment Cycle.

 

Why would anyone want to be an RE investor if it is not perfect and involves work?

 

Now that is a very good question; let me count the ways:

 

1 - It is a way to diversify your portfolio in a way that enables you to apply some dynamics unique to this particular investment category.

 

2 – Real estate is a proven boot-strap investment in which someone can build sweat-equity by managing and improving their properties.

 

3 – The plan outlined only shows the scenario for the first ten years, after that the picture gets very rosy, indeed!

 

4 – REI enjoys a favored tax status not afforded other investments at the same level of risk exposure.

 

5 – REI allows you to dual-track your efforts; as an RE investor, you will also harness the dynamics of owning a small part-time business.  Read The Millionaire Next Door. Most ordinary millionaires were also small business owners.

 

I could go own but why?  Those are reasons enough for the time being.  More will become self-evident as your knowledge base increases.

Real estate investing is a unique opportunity to generate financial security from the sweat of your brow. To get in there and fix-up properties and generate equity.  When you generate value in this manner, it is what is known as Sweat-Equity.

 

I advance the Buy and Hold (B/H) school of REI because I have seen it work for others and it has worked for me.  The basic premise of B/H is that you buy the property and hold it for a long period of time.

 

In contrast, there is what is known as flipping properties.  When you buy a property with the intent to sell it in a short period of time, that is known as flipping.  I never liked it because it requires a higher level of expertise and does not have as high a fudge-factor (less room for error).

 

I am not, however, an advocate of the No Money Down, or Carlton Sheets school of real estate.  REI is a business: ALWAYS KEEP THAT IN YOUR FRONTAL LOBE!

 

A business needs adequate financing.  You can do no-money-down-deals but it adds risk to the scenario.  It is my proposition that you should always buy investment properties with at least enough down so that you break even on rents and total carrying costs.

 

Also, you will need a war chest of cash to deal with normal operating costs and costs of doing business.  One secret of REI is to maintain your property to a higher standard than your competition for tenants.  That takes money.

 

That being said, if you have a regular job that places you somewhere around the middle-class as defined by income, you can get there from here. Save, save, save!