Switching From Buy & Hold to Fix N Flip Niche Strategy Part # 1

Greetings Everyone,

Its been a Super Long time since I wrote anything Real-Estate Related as I had shifted my focus to the stock market intermittently and realized how long its been since I addressed my Current situation in Real Estate investing.  As I become more proficient in the Stock Market, I will share my findings as to similarities to real estate investing as well., 

Here it is….and here we are.  So, last time, the journey was all about Buy and Hold Strategy.  This is where you find a property at the best possible price and then whether its off-market, or On-Market MLS, provide offers and once its accepted, the fun begins.  There is so much Due Diligence in Property selection that it deserves its own topic so we will discuss that in more depth in the future.

Where does the fun begin?  So, as the due diligence process is completed, the selection of the property in terms of location has been identified, average price of rents in the area has been noted along with the Debt Service to truly come up witn Debt/Income ratio and finally the decision of management is identified.  This comes down to LandLording or hiring Property Management team to handle day-to-day operations of the property or properties.

There is no right or wrong answer as to which option the investor chooses, it depends on Strengths and weaknesses. This also deserves its own highlights as well and will be discussed in more detail in future write-ups.

Lastly, the property is now ready to be fixed up for any needed repairs and listed available to Qualified renters as one of the best options for Housing in that area.

And now things change….So, after several years with steady cashflow, My Credit partners wanted to divest and go into a Different direction based on their Needs and wants at the time.  So, with several meetings and discussions, it was FINALLY decided that they would be exercising their final “Exit Strategy’ of divesting and profiting (buy-out) so that my Business would be the Sole-Owner/Operator.

I chose Property management as the Primary option to handle day-to-day activities simply because the property is OOS (Out-of-State) investment property.  Im a firm believer in treating a Business LIKE a business and allowing the best Team to handle what it does best.

So, now, that this changeover has taken place – another Brainstorm has taken place with another valuable team member of my Power Team and the decision was made to enter into the Fix N Flip investment niche strategy.  What does Fix N Flip mean?

Fix N Flip simply means that once the due diligence has been completed, the type of property that is purchased is distressed.  The Goal is to fix up the property to the top Notch level so it can be sold to an aspiring homeowner.  More on this topic in the next version.  Just remember, timing is everything and Fix and Flip projects are Very risky to do to say the least.  This is not for the Solo entrepreneur to handle alone.

Stay tuned for more in-depth discussions on this Fix N Flip strategy.

How To Build Wealth In Real Estate

When someone is interested in starting a real estate investing portfolio, it means that you are actually starting an investment business. It is always a good time to start planning and taking the time to understand each step along the process. Let’s dive into this discussion and give specific details for building wealth in Real Estate.

The planning process is critical to understand that there are many moving parts in the Real estate investing niche. There are several exit strategies to consider. Wait? What do I mean by exit strategies? Well, exit strategies are the multiple ways you plan to exit or transfer into another mode of investing. This could be a complete SALE of your investment property, it could mean that you will lease your property and sell it Later. It could also mean that you plan to keep your property LONG TERM for passive income/steady cashflow. In addition, you never plan to sell the investment, only instead, you continue to capture money from it thru refinancing.

THE Wealth Process Begins At The Purchase

How to build wealth in Real Estate begins with buying investment properties at a discounted price. Then and only then can you capture the savings needed for later on during the process. Lets say for example, your are going to complete a Fix and Flip strategy. This generally means that you are planning to purchase a “distressed” property at a steep discount. Once you have completed the closing process, you will estimate repairs to rehab this property at a HIGH Level. The plan involves fixing all repairs needed and going above and beyond so that the home is practically BRAND NEW. You are going above and beyond on your repair budget because you ULTIMATELY want to sell or FLIP this investment property to a RETAIL Buyer, or potential HOMEOWNER at RETAIL Price. The difference or SPREAD between the RETAIL price and your buying price including ALL expenses needed to get the property to be SELL-READY will be your Profit. Typical profits for a good Fix and Flip could average around $25k and higher depending on your location in the country you reside in and comparable sales in the city/state you live in.

Another strategy that a potential investor could plan for is called the BRRRR Strategy. BRRRR stands for (Buy, Rehab, Rent, Refinance, Repeat). This strategy is similar to the Fix and Flip except that the once the investor completes the rehab work, he rents it out to Qualified tenants in a great location and charges premium Rent price for staying in the investment property. The purchase would be the same as if it were a Fix and Flip except that the strategy is Buy and Hold for cashflow. After a year, maybe longer, the investor would then refinance to pull the equity out of the property and use those funds as down payment for the NEXT rental property. Therefore, repeating this process as long as the investor has done his due diligence on the property, the location, and has looked at COMPS or Comparable sales in that area, then this can be repeated.

Ways To Reduce Your Risk

First thing that comes to mind is Insurance. Make sure that you have insurance covering the investment property. It is not the same as homeowner’s insurance, but the policy coverage is similar. Next, is the entity type that owns the investment property. Check with your Real estate attorney to determine the best type of entity is best for your investing situation. Whether its an LLC or S-Corp or LLP, the entity type should match what your plan is going to be including your exit strategy. Another way to reduce your risk is by controlling your spending specifically when it comes to Rehab costs. This means choosing reputable contractors and sub-contractors that are licensed, bonded and insured. Lastly, and most importantly when choosing to set your investment property for a rental, a good property Management team must be worth their weight in gold. They must be able to screen tenants, collect rents TIMELY AND if necessary serve eviction notices promptly should the tenants become unable to honor their lease.

Completing The Process Is Rewarding

Whatever strategy has been used and there are lots more that was not mentioned, however, the point is to surround yourself with experts in the field of real estate investing. If you are a beginner, take notes and document your experiences at each phase, whether its written down or recorded on video or audio. Repeat the process and show your progress to others who can partner with you. Each time, you gain more experience and also you utilize Leverage. There are several forms of leverage commonly known as OPT (Other People’s Time) and definitely OPM (Other People’s Money). This is how to build wealth in Real Estate!


The Saga Of My 1st Investment Property: Year 1

It was this time last year that my Financial Partners and I closed on our first investment property in Orlando, FL.  It was an exciting moment as I was curious how I would handle a long distance investment.  The success of this investment depends on how well the Property management team will cover repairs & rehab work and also do the marketing to find qualified tenants.

Continue reading “The Saga Of My 1st Investment Property: Year 1”

How To Invest In Real Estate For Passive Income

Investment Property Used For Passive IncomeI will begin this discussion with explaining why I am passionate about receiving passive income.  First, the short

version is that it is the opposite of earned income.  So, let me explain – in order to get earned income you must show up & produce a certain amount of duties over a certain period of time.  These duties may be labor intensive or mentally intensive.  Either way, you had to work & produce results in order to get paid at the end of the day/week or however your payroll department rolls out checks.  In addition, in order to receive earned income you must show up in some capacity, otherwise you don’t get paid.

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