Types of Real Estate Investors

There is more than one way to approach real estate investing. There are a few primary types of real estate investors, but even within those categories, there is a lot of variation. Keep reading to explore your options and find the right strategy for you!

Buy-and-Hold Real Estate Investors

The Buy-and-Hold Real Estate Investor typically buys a property with the intent of holding the property and renting it out for income. Holding a property over time offers these investors three potential areas of return: appreciation, debt paydown, and the tax benefits of depreciation.

The Real Estate Financial Planner™ software is ideally suited for modeling the buy and hold real estate investor.

How Buy-and-Hold Investors Use REFP

The Real Estate Financial Planner™ (REFP) software is ideally suited for modeling the buy-and-hold investment strategy. You can use a variety of  Rules for modeling specifically how you’re acquiring  Properties and holding them. You can even model the sale and refinance of these properties.

Nomads™

Nomads™ are essentially Buy-and-Hold Real Estate Investors who acquire their properties by purchasing them as owner-occupants first. They move into the property and live there for the time required by the lender. After the required minimum by the lender (usually a year), they convert their owner-occupant property to a rental and repeat the process.

How Nomads™ Use REFP

Nomads™ can benefit from all the content and resources we create for buy and hold real estate investors. They are, after all, Buy-and-Hold Investors after they convert their owner-occupant property to a rental. We also offer additional training and resources specifically for Nomads™ to address any considerations unique to their investment strategy. Part of the additional tools for Nomads™ are unique  Rules for the Real Estate Financial Planner™ software to quickly and easily model Nomad™  Properties.

House Hackers

House Hackers are Buy-and-Hold Real Estate Investors who optimize the income they are earning from their own owner-occupant properties. They often achieve this by renting out part of the property they are living in.

For example, they may purchase a duplex, triplex, or four-plex and live in one of the units while renting out the other units. Or, they may buy a single family home and rent out the extra bedrooms or mother-in-law quarters.

How House Hackers Use REFP

Nomads™ are sequentially acquiring properties as owner-occupants, and House Hackers are getting extra income from the properties they are living in. So, you can be both a Nomad and a House Hacker, and take advantage of all the tools we have available for Nomads. You can also find additional resources made specifically for House Hackers.

Fix-and-Flip Real Estate Investors

Fix-and-Flip Real Estate Investors are looking for properties they can buy, usually at a discount, where they can fix up the property and resell the profit for a profit within a short period of time.

These investors are typically focused on short-term cash flow in the form of capital gains. They often use this as a primary means of earning money to live on. Sometimes, but not always, they also earn money in excess of their standard of living and using it to invest in some properties to keep longer term as rentals.

How Fix-and-Flip Investors Use REFP

If you want to model the income from a fix-and-flip real estate investment, you’d typically do it by modeling it using a  Paycheck and Personal Expenses rule that models how much you net each month (on average) from your fix-and-flip activities.

Creative Real Estate Investors

I often like to refer to Creative Real Estate Investors as “entrepreneurs” rather than “investors”. I think it better describes the nature of their business. They are really in the business of marketing to find motivated sellers, structuring creative deals, and acquiring properties creatively. They often sell their properties creatively as well.

I would include real estate investors interested in creative financing strategies like lease-options, lease-purchases, subject-to, and owner financing in this group.

How Creative Real Estate Entrepreneurs Use REFP

Depending on how a Creative Real Estate Entrepreneur runs their business, you can make a case for modeling this type of investing activity in one of two ways. One option is model it as plain income using the  Paycheck and Personal Expenses rule. This would be similar to how we might model the fix-and-flip real estate investment strategy. Alternatively, you can model it more like a buy-and-hold real estate investment by modeling each  Property purchased, rented, and eventually sold.

Wholesalers

Wholesalers are typically looking for amazing, investor-grade deals. Then, they negotiate the terms of purchase with a seller — often a motivated seller. Finally, they sell the rights in their contract to a second investor. The second investor is typically one of the investor types we’ve covered above.

Alternatively, sometimes the Wholesaler will close on the property and immediately resell it to the second investor instead of assigning their rights in the contract.

How Wholesalers Use REFP

Wholesalers are typically wholesaling to generate immediate income. So, if you’re trying to model it in the Real Estate Financial Planner™ software, you should model it similarly to how you might model a fix-and-flip real estate investment with a  Paycheck and Personal Expenses rule.

Bird Dogs

Bird dogs are a lite-version of wholesalers. Bird Dogs just do the preliminary work of identifying potential deals and then turning the lead on to other investor types who then pursue buying (or wholesaling) the property.

As you might imagine, Bird Dogs are typically paid a much smaller fee for their work than a Wholesaler who will negotiate the deal, control the deal with a contract or option, and then sell the deal or their rights to the deal.

How Bird Dogs Use REFP

To model a Bird Dog strategy in the Real Estate Financial Planner™ software, you’d use a simple  Paycheck and Personal Expenses rule that estimates how much income you would make in a typical month.

Make It Easy With Real Estate Financial Planner™

Our focus at the Real Estate Financial Planner™ is to be a hero to three investor types: Buy-and-Hold Investors, Nomads™, and House Hackers. We focus on creating classes, thinking processes, checklists, and tools to make these investments faster, easier, and more profitable. Sign up for your “forever free” REFP account today, and explore all the resources we have to offer to make the most of your next investment!

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