Realty411 Magazine Featuring Lori Greymont

Can Investors Still MAKE MONEY Flipping Property? S By Kathy Fettke, Real Wealth Network an Francisco and San Jose led the nation in house flipping, according to Trulia. Will that trend continue? And if not, what will be the best strategy this year for making money in real estate? Extraordinary returns can be made by flipping houses (finding run-down properties, fixing them up, and then selling for a profit), but substantial losses can also occur. The key is understand market cycles. In markets where home prices are increasing every single month, it’s a lot easier to make a profit flipping property. You can make mistakes, do less renovation, and sometimes do absolutely NOTHING to improve the property and STILL make money. However, as we now know all too well, the opposite is true when home prices are flat or declining. In a down market, the chances of being able to buy at a low enough price to turn a profit get slimmer, leaving you with a very risky investment. While home prices have been steadily rising for several years, will that continue? What are the signs we should be noticing? Certainly we need to be paying attention to affordability. We also need to be aware of what could happen to a market if interest rates were to increase. Supply and demand is always important – is inventory increasing or decreasing? Many markets have seen home prices surpass 2006 peak levels, and we already KNOW that was a bubble. Is it possible or even sustainable for prices to continue to increase in those markets? THE REALITY OF FLIPPING HOUSES The truth on the ground is far more complex than most real estate gurus would have you believe. Inexpensive houses are getting harder to find, and yet more and more speculators are hunting for them – driving prices up. Even foreclosures are selling for close to their true market value, before any renovations have been done! Those who are lucky enough to find deals often have to deal with mold, foundation, or pest problems – and yet prices don’t reflect the amount of work required. Fixing the prob- lems could wind up eating up far more money and time than initially planned. This can make flipping houses a full-time and difficult job – especially for those who are new at it or already have full-time jobs. Please proceed with caution before jumping into a flip. Partner with someone who has done it successfully many times before. Realty411Guide.com AN EASIER WAY TO MAKE MONEY IN REAL ESTATE Most people are too busy to put in the hours of time it takes to find, renovate and resell property. The good news is, you don’t have to! It’s possible to see high returns in real estate with little of your own time and effort by simply pur- suing passive real estate investing options instead. And these opportunities abound. In fact, this is EXACTLY the right market cycle for passive real estate investing! According to the Joint Center for Housing Studies at Harvard, renters made up 31% of households in 2004. By 2012, that number climbed to 35%. The rentership rate for people between 30 and 64 is the highest it has been in over 30 years! And professional management allows you to enjoy the returns on your investment without having to deal with the day-to-day stress of being a landlord. When we buy a quality property in a safe neighborhood near jobs and good schools in a solid market, and then rent that property to a qualified tenant for more than the expenses, we create a life-long passive income steam for ourselves. And every single year we do this, we get a raise because rents are increasing along with inflation. There are obviously some tricks to doing it right so that the rental property is truly passive. But those tricks are easy to learn. Make sure the home is fully renovated to like- new condition so that you don’t have to deal with on-going repairs. Buy near employments centers in low crime areas with good schools. And look for property where rents are 1% of purchase price in order to get enough cash flow to cover expenses. If you live in California or other high-priced markets, finding a property that meets this description is nearly im- possible. California property is not known for cash flow. In PAGE 18 • 2015 reWEALTHmag.com

Realty411 Magazine Featuring Lori Greymont | Page 18