Time To Push The Button.....PART 2

"Why on earth do I want to buy a little crappy house in Philly when I can buy an apartment building, or a laundromat, or a big house in the country and flip it or rent it, and make gobs of money?"

Why oh why do all of the programs, for the most part, teach starting out with what is typically called "bread and butters"? Well, there are a number of reasons, not the least of which is that you should make your mistakes, and you WILL make mistakes, BIG mistakes, on smaller projects, learn from them and gradually move up into bigger deals on more complex property types. That said, some people grow comfortable with bread and butters, and some eschew them from the jump.

What's a bread and butter, anyway? Well, in the Philly area it's a three bedroom, two bath row home, and it is defined as such largely because there are just so damn many of them around here. By some estimates there are approximately 750,000 in the city of Philadelphia alone not to mention many thousands more in the surrounding older suburban areas like much of Delaware County, the Norristown area and other areas developed in the early part of the 20th century. Additionally, a three bedroom row home is the most desirable for renters because the alternative is a two bedroom — there aren't many four bedroom rows in Philly — they provide the maximum potential rent, are relatively easy to come by, and while there is no such thing as standard rehab, your goal should be to standardize as much of your materials and as many of your processes as you can. By focusing on like properties you'll make that aspect of your endeavor a little easier.

There are some drawbacks to working with this type of property for sure. Consider that there is a single point of failure in the process of producing income from your passive income-producing home. That means that should your tenant, your one tenant, skip, you have no income and so the entire burden, the mortgage, taxes, etc., all fall back on you. For example, say you owned triplexes or larger apartment complexes (take your time!), the risk of losing all of your income goes down exponentially. Of course the complexity of finding, repairing, and managing goes up exponentially as well (as also should the cash flow)!

And so life goes on. Finding bread and butters the traditional way, though Realtors®, is the lifeblood of residential investor communities because it works. As you get a taste and discover whether being a landlord is to your liking, or whether flipping works for you, you'll discover whether you're adventurous enough to start to move upstream into the world of larger multi-family properties, commercial properties (retail, industrial, ie- manufacturing) or development projects. Cut your teeth first. Avoid more complex deals such as foreclosures, pre-foreclosures, short sales, etc., and stay in the mainstream where things are more predictable and manageable.