There are three major areas when it comes to real estate investing. Each of these can be seen as the corner of a triangle as shown here.
It’s important to understand these three major areas and the relationship among them.
The first corner of real estate investing is called creating cash. This is where you use real estate to generate chunks of cash or regular cash flow from your income property.
Chunks of cash represent the type of profit made when assigning a contract to another investor or fixing and flipping a property for a larger profit. Depending on the price point of the properties you’re assigning or flipping, you can earn some good money in a relatively short period of time. This often makes for great supplementary income.
In fact, some investors make a living doing nothing more than using real estate to create chunks of cash. Creating cash in this manner is great, but it rarely leads to true wealth; that is, building up your net worth.