Not all real estate investors are the same. There are several distinct types and a lot of variation even within the primary types.
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 within a short time resell the profit for a profit.
These investors are typically focused on short-term cash flow in the form of capital gains. They often use this a primary means of earning money to live on (and sometimes, but not always, taking money in excess of their standard of living and using it to invest in some properties to keep longer term as rentals).
If you want to model the income from a Fix and Flip Real Estate Investors 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.
Buy and Hold Real Estate Investors
Unlike Fix and Flip Real Estate Investors who are buying to immediately resell a property, the Buy and Hold Real Estate Investors is typically buying a property with the intent of holding onto the property and renting it out for income.
The Real Estate Financial Planner™ software is ideally suited for modeling this type of real estate investor. Use a variety of Rules for modeling specifically how you’re acquiring Properties and holding them. Of course, you can model the sale and refinance of these properties as well using the software.
Creative Real Estate Investors
I often like to refer to Creative Real Estate Investors as Creative Real Estate Entrepreneurs instead of “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. Often they are selling their properties creatively as well.
Depending on how the Creative Real Estate Entrepreneurs are running their business, you can make a case for modeling this type of investing activity in one of two ways. You can choose to 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 Investors. Or, alternatively, you can model it more like a Buy and Hold Real Estate Investors modeling each Property purchased, rented and eventually sold.
Wholesalers are typically looking for amazing, investor-grade deals, negotiating the terms of purchase with a seller—often a motivated seller—and then selling the rights in their contract to a second investor. The second investor is typically one of the investor types we’ve covered above. Sometimes the wholesaler will close on the property and immediately resell it to the second investor instead of assigning their rights in the contract.
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 the Fix and Flip Real Estate Investors with a Paycheck and Personal Expenses rule.
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 in the case of a Wholesaler… wholesaling) the property.
As you might imagine, Bird Dogs are typically paid a much smaller fee for their work then 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.
To model Bird Dogs in the Real Estate Financial Planner™ software you’d use a simple Paycheck and Personal Expenses rule that estimated how much income the Bird Dogs would make in a typical month.