I flip houses, I own rentals, I have wholesaled houses, and I am a real estate agent. I also write a real estate blog, have a podcast, a YouTube channel, and many other things real estate related. I have learned a lot about real estate over the last 16 years. For me, rental properties are by far the best way to invest in real estate. Let me tell you why.

What is investing in real estate?

The first thing we have to look at when talking about investing in real estate, is what does investing mean? Many people lump everything real estate related into the investing category. I think there are very few parts of real estate, that qualify as investing.

I flipped 26 houses last year, but I don't consider flipping true investing. Flipping houses is a job or a business, but it is not an investment. Once you sell the house, you cannot make anymore money from the deal.

When you wholesale a house, the same thing happens. You will make no more money once the house is sold.

When you are a real estate agent, you have a job. Again you make no more money once you sell a house.

Flipping, being an agent, and wholesaling can all be great ways to make money, but they are not really investing. You can create businesses with all of these techniques if you set things up right. I have staff that help me with everything and I could disappear for a few weeks and everything would run somewhat smoothly. Below are some links to learning more about all of these businesses.

https://investfourmore.com/2014/03/20/much-money-can-make-fix-flipping-homes/

https://investfourmore.com/2014/06/12/much-money-real-estate-agents-make-first-year/

https://investfourmore.com/2015/07/19/how-much-money-can-you-make-as-a-real-estate-wholesaler/

Below is the last house I bought as a flip.

Why are rental properties the best investment?

I think rentals are by far the best way to invest in real estate. Even if you set up the business I mentioned before to run without you, you still need a steady flow of deals to keep the money coming in. When you buy a rental property it should make you money very month, add net worth as soon as you buy it, have amazing tax advantages, and the money keeps flowing as long as you own the property without doing much work.

Here is the typical rental I buy:

I get a great deal on everything I buy. I might buy a house for $100,000, that needs $20,000 in work. But when I am done remodeling it, it will be worth $150,000. I just made $30,000 in equity before I even rented it.

I want to see at least a 15 percent cash on cash return on my money. I use financing to buy rentals and usually I make at least $400 a month after paying all expenses. That includes accounting for maintenance and repairs. https://investfourmore.com/2014/06/27/how-do-you-figure-cash-flow-on-rental-properties-with-maintenance-and-vacancies/

I can depreciate the property over 27.5 years on my taxes, which saves me a couple thousand dollars a year. I can also write off the interest on the loan, repairs, and most expenses.

I have a property manager take care of the property so that I am not being hassled by tenants.

If I bought a really good rental I should be able to refinance it and get all of the cash I put into it, back out again. After selling a couple of properties, refinancing others, I have put almost no money into my rentals and they make me $8,000 a month. https://investfourmore.com/2016/12/19/how-i-have-bought-14-rentals-without-any-of-my-own-money/. This article is a little old, but I have continued the same trend. I have 18 rentals now.

https://investfourmore.com/all-of-my-rentals/

How hard is all this to pull off?

What is the catch with rentals? It is not easy to find them, buy them, and finance them. It takes time to learn all the ins and outs, and guts to make the purchase. I like that it is hard to buy rentals, because if it were easy everyone would do it. There are some other things that make buying rentals tough.

Not all markets are great for rentals
It takes cash and savings to buy them
It takes patience to get great deals
There are a lot of naysayers who will discourage you.

If you are interested in learning more about rentals I have a ton of articles on my site. Below are a few.

https://investfourmore.com/2016/09/26/how-to-use-the-brrrr-method-to-buy-rental-properties/
https://investfourmore.com/2015/07/14/what-is-house-hacking-when-buying-rental-properties/
https://investfourmore.com/2014/01/13/what-type-of-loans-allow-investors-to-put-less-money-down/
https://investfourmore.com/2013/09/04/how-much-money-is-required-to-buy-rental-property/

If you have any questions please comment below and I will be happy to help.