INVESTORS’ CORNER: Investing in real estate versus properties

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It’s a known fact that investing in Real Estate has created more wealth for more people than any other investment asset. But real estate investing is certainly not for the fainthearted. There are a lot of moving parts. Not only is the acquisition of the right property for the right price necessary for an investor’s success, but depending on which real estate strategy is chosen, finding a good contractor, a good tenant, a good property manager or a good buyer can be a challenge. A determined investor will never stop learning how all this can be done profitably and will seek to surround themselves with other smart investors while they build their team of players to make their dream a reality.

Over the years, my husband and I bought four properties that turned out to be pretty good investments. Two were profitable, one was a break-even and the final one was a 2-1/2-year headache that we couldn’t wait to get rid of. But all four properties were good learning experiences which I consider extremely valuable. One thing we learned about ourselves was that we were miserable landlords. Secondly, we realized that we really didn’t like the liability of owning properties, especially the ones that were out-of-state. Eventually, we learned to change our real estate investing strategy to fit our tolerance level and lifestyle and we started becoming the bank instead of the property owner or landlord. We began holding Real Estate backed Notes for Rehabbers who needed Hard Money to finance their projects. This matched our need for solid income with more of a hassle-free real estate investment and it provided quick financing for other real estate investors who needed loans they couldn’t get from traditional banking institutions. As the Lienholder, we can still make a good profit investing in real estate while avoiding the complexities of owning the property. The houses we lend on are the collateral with the LTV (Loan to Value) never above 70%. This doesn’t mean a loan can’t go sideways and if it does, we’d have to foreclose and become the owner of the property. But the level of hands-on involvement, liability and lack of control is like night and day for us, especially now that we are in a place in life where more passive investing gives us the freedom to do the things that are important to us – like spending time with our six small grandchildren. Note returns are usually just as good if not better than renting or flipping houses, so for us this strategy is a no-brainer.

What do I love about real estate investing? All the facets. There’s never one right way for everyone but if you look hard enough, most people can find one that is perfect for them.

Susan Jensen is the Executive Director of the Metrolina Real Estate Investors Association, which provides education, mentoring, and networking for real estate investing in the Charlotte region. She can be contacted at [email protected]. For more information, visit www.MetrolinaREIA.org.