Fix and Flip or Fix and Hold?
Oct 16, 2017 / Fix and Flip
Now our primary purpose as Fix and Flip contractors is to find, buy, fix and flip properties for a profit, this is how we make our money. But many times what I see with Fix and Flip contractors is they are spending every penny they're making, living an extravagant life while not thinking about the future.
Being in the fix and flip business we have the perfect opportunity to start accumulating a real estate portfolio. Some of the wealthiest people I know have gotten there with owning real estate - so it's never too late and the time is now to start thinking about holding your first property.
At one point in my career I had accumulated 31 units. Now this is an excellent way to take advantage of increasing markets, to take advantage of depreciation when it becomes tax time, to generate monthly income without chasing after a new deal, and finally to really build yourself a retirement.
One of the great ways to start with your first rental would be to look for a duplex property that you can buy, split and potentially sell off each half individually. If you purchase this correctly, you should be able to remodel one half of the duplex, sell it off and have enough of a profit to pay any debts that you have on the property and then keep the second unit as a rental / income property.
One of the great things about doing this is if you have a national catastrophe that causes a huge decrease in property values or just a general slowdown in the market, you can always take out a mortgage or home equity line of credit against the property or properties to weather the storm. It's great to own real estate – it’s great to be collecting rents vs. paying them… it's all about owning assets.
I prefer to own an asset that I can actually touch, that I can actually drive by, versus having all of my money in a 401k or in the stock market. As you know during our most recent market crash many people lost up to 70% of the money they had invested in the stock market. Here in the Denver housing market, even during the housing crash – we never lost more than 10 to 15%... in today’s market we’re gaining that every 12 months!
As we build our Fix and Flip business let's be smart about looking at the future, determining what it is we want to do in the future, how long we want to work into the future, and how we can set ourselves up so that we don't have to get out of bed every day to generate income in order to survive.
Jeff Hammerberg has specialized in Real Estate for 35 Years – He is a Broker, Fix and Flip Contractor / Coach and President of FixAndFlip.com. The Nation's #1 Source for tips, products and education geared toward ensuring your success in entering the fix-and-flip business.