Ranking the Top Real Estate Investing “Jobs”
by Alan Langston
I ran across the annual list of the best and worst jobs for 2015 according to CareerCast.com. Naturally, real estate investing wasn’t on the list probably because it is considered investing, but more likely because it is entrepreneurial. Most of the jobs on the list were ones where you have a boss.
It did peak my interest about what the best and worst “jobs” are in real estate investing. So, I thought I’d give it some thought. Mind you, there is absolutely no methodology to my ranking, no scientific study and no mathematical algorithm to how I arrived at the list. Just my keen powers of observation and the fact that I took time to form an opinion ?. I invite you to do the same as this article is posted on the AZREIA blog at azreia.org. It could be fun to get a lot of investors’ opinion on this subject, so go tell the world what you think.
Top 5 Ranking of Real Estate Investing “Jobs”
#1 Buy & Hold Using a Property Manager: “Show me the money!” That popular line from Jerry Maquire pretty much sums up owning rental property and having someone else do most of the work. True “mailbox money”. The strategy that provides cash flow and wealth building. Let’s see… Someone is paying you to buy you a house that probably grows in value while they are doing it. The asset adjusts for inflation in terms of rent and appreciation. Once you properly set up all the ownership aspects of owning rental property, you basically forget that part. Someone else handles most of the daily operations which is the ugly part. Sure you pay for it, but a good property manager is worth every penny. If your property manager does their job correctly which primarily consist of properly screening the tenants, enforcing the lease and maintaining the property, your risk of loss is minimal.
#2 Wholesaling (Individual): I bet a lot of you will take exception to wholesaling being ranked #2. It takes this lofty ranking primarily of the lifestyle benefits and virtually complete lack of liability and exposure. If you are good at wholesaling, it is one of the world’s most profitable part-time careers. First of all, it only takes you. You really don’t need a team. There are virtually only two skills that are needed and both can be learned – marketing and negotiations. You can be successful with little to no funding. Fundamental to success is your level of hustle. There are countless stories over the years of the wholesaler that completes a handful of deals over a two month period and takes the rest of the year off. When the money runs out, they do it again. Now this may not be the lifestyle you want, but for some it is the ultimate life of independence.
#3 Private Money Lender: This one is on the list because of what you don’t have to do and the control you possess, not to mention the ROI. You don’t have to find the deal, rehab the property or market the property. You kind of sit back and wait for the deal to come to you. You analyze it. Determine if you want to participate. Determine the amount of risk you are willing to take. You set the terms. It is a beautiful thing. Once you have your “stable” of investors bringing you deals it gets even easier. Oh, I almost forgot, you’re protected by the real estate itself. It is also easy to do in your self-direct IRA.
#4 Buy & Hold Self-Managed: All the really good stuff detailed in #1 above, but you want to do the work. Congratulations! You just got yourself a job and a pretty thankless one at that. Okay, I admit you can save some money managing your own properties and if you have enough of them this can be a very wise choice. Also, I understand that it is challenging finding a good property manager. I further understand you feel that no one can take care of the property as well as you. But, it is a job and that fact is why it is ranked lower on the list. You will need to have the personality to deal directly with tenants, be on call 24/7, build a team, develop business relationships and more. You will also need to develop skills and stay up to date on landlord tenant law.
#5 Fix & Flip: A good argument could be made that Fix & Flip should be higher on the list. Considering the amount of money you can make, the cash on cash return, use of other people’s money and the fun factor, I’d understand if you’d place it higher. The fact is this strategy is a job. It generates income along with the tax consequences. It requires an on-going pipeline of possible deals to feed the machine and you need an excellent team around you including contractors you can trust. Rehabbing is also the strategy that is most susceptible to market changes. However, it may be the most fulfilling of the strategies.
There you have it. The Top 5 Real Estate Investing “Jobs”. Jobs is in quotes because we’d probably agree that investing in real estate isn’t like a normal job. Some of the strategies like Buy & Hold aren’t jobs at all. True jobs are those that generate income. So, Fix & Flip and to some degree Wholesaling are jobs. There are several other real estate investing careers that didn’t make the list. Maybe they are on your list. While you’re thinking about it, go to AZREIA .org and give your opinion. It is certainly just as valuable as mine and I think the discussion would be valuable, intriguing and entertaining.
Ranking the Top Real Estate Investing “Jobs”