I bet you didn't know there's only three ways to invest in real estate.

Today, I'm going to break down what those three ways are.

The only three ways to invest in real estate is through wholesale, development, buy and hold. That's it.

Wholesaling, what is it? Basically, wholesaling is getting a property under contract, selling that contract to a final end buyer and collecting an assignment fee, as they call it. Basically, a finder's fee.

What is development? Development is where you go in there and you buy the property and then you improve the property or you rehab, fix it up, and then usually people turn around and they sell it. This is what people refer to as fix and flippers. Those would be development deals. Now, another example of a development deal could be buying a single lot, clearing it and ground up construction, building a new house on it. That is also development.

The third way to invest in real estate is to buy and hold. So this is where you buy a property and then you hold onto it, you rent it out, and you collect rental income off of that property. This is where you get some of those short-term Airbnbs and all that other stuff. Or if it's a traditional rental where you have somebody sign a one-year, two-year, whatever year lease, those would all be considered buy and hold real estate.

Why do people wholesale? Well, today, money. They want money right now. I say right now, but it doesn't take very long for you to get your big payday. A lot of people like to get into the wholesale game because it doesn't cost a whole lot to get into it. You don't have to have a huge infrastructure or a huge budget to go out there and start wholesaling some deals. If you really wanted to, you can go knock on all the doors in your neighborhood and just ask everybody, "Hey, have you thought about selling?"

Why do people get into development? Well, it's for today money too. It's more like next week money as opposed to today money because you have to get in there, buy the property, improve it, or fix it up, and then you don't get your big payday until after that property sells. Or you get in there and you build a new home and you don't get the big payday until after the home sells. So there is potential to make a lot of money by doing these development deals. It's just the money takes a little bit longer to get to you, but it's still a short-term strategy. I guess the only real downside of development is usually takes some capital to either get in the game or you got to have money to fix the places up and all that other stuff. So you get big returns on the back-end, but you also usually have to have some money behind you to get going and get started.

Why do people buy and hold? Passive income, money that they don't have to work for. This is a long-term strategy play here. People are looking for one of two things typically when it comes to buy and hold properties, and that is either cash flow or appreciation over time. That's why I say it's a long-term strategy. If you're looking for the big payday, the big payday comes in the form of monthly paychecks. And then, depending on where you're at and the area and the market and all that other stuff, sometimes properties appreciate over time, and if you decide that you want to sell it in 20 years, you could receive a big payday at that point in time.

How do people wholesale? Well, a lot of times they partner with agents to pick up their scraps on different people that they've talked to and they prospected to that just can't make it happen and pay a real estate agent commission. So sometimes those fall into the category of, "Hey, send this to a wholesaler because they might be able to help these people out." Wholesalers also target sellers, whether it is absentee owners, divorcees, probate cases, things like that. They'll target those sellers. They'll throw low ball offers out there to see if anybody bites. They get under contract. They turn around and assign that contract to an end buyer. They get paid at closing.

How do people get into development? Well, they target sellers. They partner with wholesalers. They partner with real estate agents. They buy the property. They improve the property. They turn around. They sell it, get a big payday on the back-end.

How do people buy and hold? They target sellers. They partner with real estate agents. They partner with wholesalers. They partner with developers. They buy a property, rent it out, receive monthly income on that rent, receive long-term appreciation over time based on their market, collect a check every month, maybe it's worth more in the future. Hold onto it for a really long time.

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