Menu
Aspiring real estate investors watch shows about “fixing and flipping” on TV that make it look easy, enticing, and profitable, and they get lured into the world of real estate investment clubs and gurus that promote DIY property flipping as the get-rich-quick strategy of the day. Keep in mind that those gurus and investment clubs make money by collaborating to market hopes and dreams (usually in the form of some expensive educational products—courses, seminars, and the like) to the less affluent. Although the magical strategy-of-the-day for getting rich quick through real estate varies over time, one of the hot button concepts marketed to aspiring novices today is that finding-fixing-and-flipping distressed properties is the path to riches.
Real Estate Investing is the process of acquiring a property for the purpose of holding it over time and renting it out. It is an ‘asset’ that generates a monthly stream of passive residual income and has the potential to appreciate in value over time. This is how you build wealth through real estate and how you become financially free—when your aggregate passive income from your portfolio of cash flowing investment properties (propertly adjusted with a maintenance and vacancy expectation) exceeds your monthly living expenses. I will not even get into all of the incredible tax advantages here that are associated with buy-and-hold real estate investing that are not associated with property flipping (you can consult your CPA on that one, and be sure to ask about the "property dealer" trap).
Sorry, the home study course from the guru at the investment club doesn’t count as an advantage, no matter how much ‘insider info’ they promise.
You are competing against established multi-million dollar professional operations that will absolutely dominate any individual in terms of their resources, capital, inside connections, market expertise, efficiency, and economies of scale. They acquire the best properties, renovate them for the lowest cost (buying materials at a bulk discount and using their own construction crews), and then either sell them to owner occupants or rent them out to qualified tenants to create ‘turn-key’ investment properties and then sell them through efficient distribution channels, so they can replenish their capital and continue to dominate.
The individual DIY Fix-and-Flipper is typically only going to get access to properties that numerous companies (which do this professionally) have passed over….which means either the properties are not desirable or they are over-priced. If the property was passed over by these highly efficient companies because they couldn’t make it profitable for themselves, how is it going to turn out for the individual who buys that over-priced or undesirable property, pays more money to renovate it and takes more time to sell it?
We are not a tax professionals, this is not tax or legal advice, and tax laws are constantly being changed and revised and may change the day after you read this. So, this is for informational purposes only, and it is your duty to consult with your own tax professional about your individual situation and the most updated applicable laws before attempting to implement any of the content in this post.
Click on a category and see all of our educational resources available for you:
GET Access TO Private buying opportunities for TURNKEY Rental properies & EDUCATIONAL RESOURCES. READ OUR PRIVACY NOTICE & TERMS OF USE.
