which way to money?

General Real Estate Investing
1

which avenue of REI is the most profitable?

2

Buying REALLY low and selling REALLY high

Keith

3

so it would be fix and flip? thanks.

4

It depends on whether you want cash or real wealth… :wink:

Keith

5

I dont want to be wealthy broke person. :cry:

6

I apologize for my friend but we take for granted that people know what we know. What my friend kdhastedt is trying to say is that people confuse income with wealth all the time. If you buy fix up and sell 5 houses per year for 4 years you would have owned 20 houses and made about $15k per house. That means you have made $300,000 over a 4 year period and at the end of that time you would probably have spent most if not all of the cash and have none of the houses thus no wealth. If you buy 20 houses that each cash flow $200/month over the same 4 years, you would at the end of that 4 years a reoccurring income of $4,000/month plus you would have $200,000 in equity in $2million worth of houses (assuming you only have $10,000 equity in each house). You then have cash and wealth. You see selling houses is like killing the goose that lays the golden eggs. The positive cash flow is the golden egg, the goose is the house (and you thought they taught you those nursery rhymes when you were 5 years old just for the fun of it). So the answer to your question depends on if you want to build assets so that you can sit by your pool and sip iced tea all day or do you want to hustle the next house to turn for ever.

7

ok I see your point, so you think being a landlord will make the most money? thanks.

8

I do, but my goal may not be yours. I have my lifestyle set. I live in a big house with a home theatre and a pool, drive nice cars and go to the country club to play golf and go out for dinner every night. I vacation in Hawaii every year. I am not accumulating, I am looking for lifestyle maintenance. If you are in the acquisition stage of life, you probably want to buy fix up and sell for quick cash. If depends on you.

9

so how did you get started? (hope you dont mind)
it seems like buy fix sell keep some profits and thenreinvest in renta, to great wealth ;D

10

I developed my lifestyle working in corporate America. When I decided that retirement using my 401k and IRAs just didn’t add up, I decided to use real estate as a vehicle to maintain my lifestyle.

11

thanks Bluemoon for the help.
anyone else have any ideas? thanks.

12

I think that buy-and-hold (done correctly) is the best of all worlds…you have an income stream from positive cashflow, appreciation of investment, tenants paying down your principal, and tax advantages.

…and I’m not ALWAYS here to defend my position!

LOL,

Keith

13
I am not accumulating, I am looking for lifestyle maintenance. If you are in the acquisition stage of life, you probably want to buy fix up and sell for quick cash. If depends on you.
That's an interesting point. The rehabbing mentality is totally different from rentals. Rehabbing requires daily (not monthly) management, daily acquistion to keep the pipeline full, and constant motion. With rentals you can be in semi-retirement mode forever and do okay.

If you apply the rehabbing mentality of constant progression to rentals, you’ll be one rich SOB accumulating cash flow and equity along the way. Acquiring 1 SFH per month for the first year, a duplex every month for the second year, a triplex every year for the third year and so on, will leave you with 180 units by the end of year 5. With the appreciation and equity build up from the first years property, you could easily sell them off to buy some bigger properties.

On the other hand, having a rental mentality and applying it to rehabs would leave you with a menial income. Slaughtering the goose in this case would be stupid. I’ve had some success churning the equity from one rehab to another and accumulated plenty of cash along the way. You can make much more money this way by converting your equity to cash if you’ve got the energy to keep on going. I don’t take vacations to Hawaii or anywhere else. Spending 4 hours on a golf course would make me feel like I was wasting valuable time (and very frustrated). I am a money hoarder and I’m not the type to stop and smell the roses. Instead of accumulating equity month by month, I immediately reinvest it, with compounding returns. If I start with $50,000 in January, it will be reinvested 3 or 4 times by December bringing back 100% returns each time for a total of 400,000- 800,000. Wealth comes MUCH faster by flipping your equity over and over but it takes much more work.

It really does depend on the stage of your life your in.

14

thank you for the valueable infomation.

15
Acquiring 1 SFH per month for the first year, a duplex every month for the second year, a triplex every year for the third year and so on, will leave you with 180 units by the end of year 5.

Thank You Danny. Now I feel like a real loser!!! 180 units in 5 years…not gonna happen. I’ll be VERY happy if I can reach my goal of 100.

Mike

16

Sure, just when the color of the state is on the line. :wink:

17

Not to worry…I’ll defend THAT position…Colorado is tilting badly…as Eric Cartman says, “G. D. HIPPIES!”…well, at least over here on the Western Slope, it’s safely RED…

Keith