Flipping is the purchase of real estate for at least 30% below current market value. In the flipping strategy, you buy a property under its current market value, but you select only properties with some unrealized potential. Then, immediately after purchase, you make whatever changes are necessary to increase the value of the property. In many cases, full rehab is required. In general, you must increase the value by at least 30% within a few months in order for the strategy to be worthwhile. Then the property will be sold (flipped) to collect profits.
Buy and Hold means that you buy a property on terms that have a capitalization rate of 8%-12% or more. The capitalization rate is the net operating income (rent minus operating expenses but before debt service) divided by the purchase price. In other words, it is the cash-on-cash rate of return you would get if you owned the property free and clear. This property will be rented out and held for a long period of time to collect profits.
Wholesale real estate investing is one strategy in which I strongly suggest practicing caution: Wholesale transactions can be used in some cases of your overall investment strategy and can be very beneficial. Wholesale is buying properties that are at least 30% under value and flipping to other potential investors for a small fee.
Take Caution: In some cases, wholesale investors may slightly overpay for some of the properties just to get them under contract while looking for unsophisticated investors to purchase them. This strategy can really take advantage of their lack of sophistication. Be careful, wholesale can become unethical, immoral, and sometimes illegal. I do not advocate the wholesale strategy as a goal-setting strategy. It should only be used in isolated cases.
We will sit down with you and ask you a series of questions to discover the right investment strategies for you. There are different strategies within strategies that might be better for your particular financial goals. This is a free consultation. All you need to do is call or e-mail us.
In the past, investing in real estate in Colorado Springs required little or no money down. That is not the case anymore. New regulations and lending controls have eliminated no money down loans. In most cases, lenders are now requiring a 25% down payment for an investment property. Even though investing now requires money down, it does not necessarily need to come directly out of your personal bank account. There are ways in which to get your down payments. Home equity loans, self-directed IRA’s or the sale of stock are some examples.
The answer is really yes and no. Let me explain. It is true that many investors are making a living in Colorado Springs by flipping properties. However, it is a full-time job for them. They are profitable because they buy in bulk, have contractors who work inexpensively and have mastered the art of rehabbing and selling quickly. They also have the cash needed to hold if needed. If you have cash, plenty of time to spend working and coordinating a flip, you can indeed make money.
There are others, who are borrowing hard money loans (expensive) who do not have the time to invest in the flip. These are usually first-time flippers. They also do not have the vendor, contractor or retail resources available to do the flip cost effectively. These are the ones who get in and do not succeed in making a living. Let me be clear, flipping is NOT a part-time job. You need time and resources to be successful. Whether you are a professional flipper or a first-timer, we will always consult with you. With our help, you will have better success than reading a book and attempting it on your own.
The short answer is: yes! The conservative answer is: It depends! We will sit down with you to explore the possibilities. However, we are living proof that investing in real estate is very profitable. Our founder came from the banking and investment industry and fully submerged himself into real estate. That was done because of the belief that real estate is the greatest investment on Earth. We have made a lot of money for many of our clients. It will depend on your financial goals, risk tolerance and some other factors relating to your actual investment vehicles.
Absolutely, Working with us does not mean you must use our management services. However, I would strongly suggest that you do not take on management yourself. Every year, Americans invest billions and billions of dollars with money managers on Wall Street to invest for them. They are the experts who know how to invest our money. They trade our dollars 8 hours a day, 5 days a week. We trust them. Likewise, why would we invest 100s of thousands of dollars in real estate and attempt to manage it ourselves?
We have managers that manage property 8-10 hours a day, 7 days a week. To screen tenants, They pull credit reports, background checks, verify income, verify references, handle emergencies in the middle of the night, etc. The founder of the company does not even manage his own properties.