For Beginner Real Estate Investors, Fix and Flip May Not Be the Best Strategy

Contrary to what all the “Real Estate Investor seminar” companies that roll into town from out of state to teach people how they can get rich investing in real estate, I believe fix and flip may not be the best strategy for a beginner real estate investor.

I often go to these real estate investing seminar sales pitches, because I find it entertaining for me to hear these out of state “seminar pitchmen” – self proclaimed market experts, on my local real estate market, mainly because it gives me a better understanding what people who want to become real estate investors are being told and where they are getting these ideas.

Yes much of what they teach is true and valuable information, and yes wholesaling and fix and flip should return your investment in a much shorter time frame than a buy and hold strategy, but Real Estate is local, local conditions (the market may be different on one side of the street than the other), local laws, state laws are different etc…

Historically real estate has been a good long term investment vehicle, apparently many investors feel, judging by investor buying activity in the area this past year. An example of the current market would be a sign a builder had up saying homes starting in the 130’s my being familiar with the community I know of several houses that same builder build 2 and 3 years ago that are listed as bank owned or short sale starting at 71k. As a matter of fact I was in one that closed a couple of months ago that was move in ready that sold for 58k which was over the listing price at the time so that would have been a better time.

But even a 71k slap a little lipstick on it (new carpet, paint the inside, a few scented candles ) for 59 thousand less.

Some are seeing the opportunity they have and taking action. Some are watching what is happening, and some will wake up someday and wonder what the heck happened.

And in all fairness their some see the opportunity and would like to take advantage of the opportunity now but don’t think they have the money to invest.

Until you have a professional team assembled, I think you might want to keep your day job, maybe rollover your money from your IRA into a self-directed IRA to use to invest in real estate with, preferably, investments that don’t require much in repairs, at least until you have a good contractor on your team, (oh you are good with a hammer and plan to do it yourself, didn’t they mention at the real estate investor seminar that, in Arizona, if the repair costs, you know, labor and material cost were over $1000 and you sell or rent out the home within 12 months, that all the work must be completed by licensed contractors in AZ) that you can trust and are confident will not go over budget eating into your potential profits.

This information is for informational purpose and not intended to be investment advise, and should be explained to you in detail. You should always feel free to consult an attorney and/or tax adviser to obtain further information you deem necessary. I want you to be prepared.