What strategy would be the best fit for me?

Within Real Estate investing there is a few different areas one can make money. I am going to try to describe the most common ways here.

First we have the wholesalers (or Bird dogs as they are sometimes referred to). What they do is find a motivated seller, negotiate a discount from the actual value of the house and then assign the purchase contract to other investors that will either keep the house as a rental property or fix it up and sell for a profit. In my opinion, the two most important skills for a wholesaler are, being a great salesperson and knowing how to accurately estimate repairs. Without these skills it will be hard to negotiate a great deal with a motivated seller or finding another investor willing to purchase the contract when the repairs turn out to be 2.5 times the estimated amount.

Second type of investor is the landlord, these people usually don't look for immediate cash profits but rather for a way to build long-term wealth. The Landlord investor usually buys houses at a discount (70% of market value) and look for the property to immediately cash-flow. To figure out if a property is going to cash-flow the most common formula used is the 50% rule (50% of the gross rent goes to operating expenses, the other 50% goes to the debt-service and profit).

The third and maybe most commonly known investor type is the "Flipper", this is an investor who buys a outdated, ugly, vacant house, renovates the house and sells it to a retail buyer at a profit. This is the type of investor that is usually portrayed in the TV-shows (Flip This house, Property ladder etc). There is still a lot of this going on, even in today's economy. The downside to flipping is that it is not as easy as it looks on TV, contractors, inspectors, appraisers, lenders and all other people involved makes flipping houses the riskiest kind of investing in my opinion. The upside is that the greater the risk the higher the profit so if you can get really good at this, there is money to be made.

There are other ways to make money in real estate as well, you can invest in notes and Tax-liens, you can become a private money lender etc. But these are still fairly unknown to me, if I learn more about them I might post some later on.

So which type of investing should I choose? My long-term goal is to be able to do flips while at the same time building a rental portfolio, doing this would enable me to reap the cash-benefits of flipping while enjoying the wealth building of being a landlord.

As I mentioned in my first post, I already have my first rental so what I would like to do next is flip a house. In a perfect world I can find a partner for the first flip that has done it before, it would be great to be able to just learn while doing. If I can't find a partner, I will offer to work for free for other investors just to learn.

Stay tuned..