Why We Don’t Fix and Flip Real Estate

Posted on 14. May, 2012 by in General

Real estate investing has many profitable faces. It’s hard not to get distracted by all the possibilities. Ideally you need to pick the investing strategy that works for you and be the best you can at it.

For us, that’s buy and hold investing.  Yet, so many of the people we come into contact with ask us why we don’t fix and flip real estate. Many people are under the false impression that flipping real estate is the easiest and most profitable option for making it big when time is short.  The books, info gurus and tv programs all make it look real easy – surely it can’t be that difficult.  It’s all about budget right?

We flipped properties in the UK (thankfully before we had the kids) and believe us when we tell you, it is incredibly tough and stressful trying to flip a property in a very short period of time whilst holding down full time jobs and sticking to extremely tight budgets.  It’s certainly not easy like it looks on tv but it can be very profitable if you can devote the time and effort to do it properly – but trying to combine full time jobs and flipping deals quickly is totally insane and it’s something we would have to think long and hard about before doing it again.

Visiting the property daily (yes, you do have to visit daily – we’ve made that mistake) to manage the contractors and quality of the work  is incredibly time consuming, especially when adhering to a strict schedule.  And even more tough if you decide to do some of the work yourself. If you are going to flip real estate for maximum profit, you have to do it quickly – and that’s where a full time job gets in the way of a successful flip.

This time round we have chosen buy and hold as our investment strategy and here are some of the reasons why:

  • We are working toward building a long term sustainable portfolio that provides a steady stream of cash flow, month in month out.
  • We work hard to find the properties that fit our investment criteria, we buy only good, solid properties in great locations. We are more than happy to improve them but they remain in our portfolio for the long term profitability
  • Selling a cash flowing property just doesn’t make sense to us.
  • The tax implications are much more favourable – I mean, who wants to get slammed with capital gains of 100 per cent on a property you’ve just broken your back over??

With 3 children in school from September and Richard sniffing out the best deals in town, who knows what great opportunities will come our way.  But we can say from experience that fixing and selling is not an option for us – fixing and keeping is more in line with our long term investment approach.  What strategy works best for you? We’d love for you to share your comments and experience.

Here’s to Your Investing Success,

Jane

 

 

 

 

 


 

Tags: , , , ,

2 Responses to “Why We Don’t Fix and Flip Real Estate”

  1. Erwin

    15. May, 2012

    You hit the nail right on the head Jane! (figuratively and I guess literally when you were flipping ;)

    The biggest part of the equation of a flip is buying at a massive discount and many who think they want to flip don’t seem to realize that home owners do not want to sell for massive discounts, they want to sell for market value.

    With my investors, we actually like buying the “flipped” property since we’re buying in areas of re gentrification and we’re happy to let someone else do the heavy lifting. All we have to rent them out for top of market rent then let the market take care of the rest.

  2. Jane

    15. May, 2012

    Thanks Erwin for your great comments. Like you, we are more than happy to pay market value for a flipped property, knowing we can rent it easily and effortlessly. But having the headache of doing all the work and maintaining such tight deadlines and budgets is not for us these days. Our time is too precious and better spent working on our business, not in our business.

Leave a Reply