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Flipping Versus Holding – Which is Better?

Some investors focus on flipping—that is, turning properties over quickly, rather than keeping them long term. In some cases, holding property generates more long-term wealth for you than flipping. Therefore, you may consider flipping some properties and holding others. On the other hand, you may consider using the flipping strategy awhile, and then begin holding properties later. The big question is, “When should you hold versus when should you flip?”

The Advantages of Flipping

The main advantage of flipping is that you get your cash out immediately rather than later. Flipping in a competitive market will be like trying to drive up a 90 degree hill. If you are able to buy a property correctly, then you can receive a paycheck immediately but you will have to keep buying properties correctly to receive a consistent paycheck similar to a rental property.

The Advantages of Holding

Property holders can generate true wealth over the long term. Historically, property values appreciate at a rate greater than the rate of inflation in the United States. If you buy in the right neighborhoods, your annual appreciation may reach double digits. You can use properties with equity as collateral. You can provide rental income for your retirement years, and you can pass property down to the next generation. Once your rental properties are owned “free and clear,” you have passive income from rents paid that gives you an income even when you’re not working.

What’s Right for You?

The important question isn’t whether flipping is better or worse than holding, but which strategy is right for you. To discover the answer for yourself, ask these questions:

1) Do I need additional income now or in the future?

2) Am I in a high-income tax bracket that would be adversely affected by more income now?

3) Does my local real estate market present opportunities to acquire bargains, yet still command high rents that would cover my expenses if I need to hold on to the properties?

4) Do I have other income or savings that I could tap into in case my rental properties become vacant or need major repairs?

5) Is the local real estate market rising or falling at this time?

6) Does bringing in income now or later fit into my short-term and long-term financial goals?

Most investors start out flipping houses, and then gradually work into managing rental houses or becoming involved in larger, more complex real estate projects. Some people don’t have the temperament to deal with tenants and the headaches that come with rental properties. Some look for side income by flipping. Others want to quit their jobs and make flipping houses their full-time business.

As you can see, many investors were once in your shoes making these decisions. Be sure to consider all options, including a mixture of flipping and holding properties. Reevaluate your financial goals on a regular basis and adjust your real estate strategies to support these goals.

Phoenix Cash Flow Today – The Key To Longevity

When you own the houses, you have your own personal money machine! Obviously, you must maintain the property and provide the necessary management- But, in exchange for doing that, you control the money’ It’s yours to spend any way you choose. Owning your own widgets is the surest path to financial independence. The basis for wealth behind nearly every rich person can be traced back to the ownership of a patent, a copyright or a deed! Owning income real estate puts you in with the right crowd.

Well-Financed Houses Are Very Little Risk

In terms of investment risk, I’m talking about the risk of losing your assets – Rental properties, like the ones I own, are about the safest kind of investment you can make. Naturally, you must avoid paying too much and taking on too much mortgage debt. Residential renters are a much easier bunch to attract than commercial tenants. Also, everyone needs a shelter. Houses are considered a basic necessity of life. The danger of anyone taking your investment houses, with any equity, is almost nil! If you buy them right and structure the financing so your tenants can pay them off, you’ll be very well rewarded for your initiative.

Your Own Personal Money Machine

After many years of trying different strategies to make money with real estate, I can tell you without the slightest “hiccup” – it’s not a sound idea to buy houses that don’t pencil out on the day you acquire them or shortly thereafter! There’s only one reason in the world that I know of to buy investment real estate, THAT’S TO MAKE MONEY. If it don’t or can’t, then I don’t want it regardless of whatever else I may like about it.

Buy Properties That Earn Big Profits TODAY

I have been “sucked-in” on FUTURE VALUE, HIGHER POTENTIAL and PRIDE OF OWNERSHIP so many times, I’m embarrassed to admit it! Fortunately for me, I learned my hardest lessons early in my career before I lost the ranch.

If your goals are similar to mine, which are investing for current income and long- term security (at least until I’m senile), with the least amount of daily management involvement, then my strategies will work for you like they do for me. Naturally there are many things to learn and most of it should be accomplished during the early stages of your investing. On-the-job training is most effective! There are several important things you need to consider without delay.

I Have Been ‘Sucked-In’ – Don’t Let Big Mortgage Payments Rob Your Profits

When you acquire properties with financing, which most of us do, you should always insist on long-term paybacks. The longer the better, but nothing less than 10 years.

Be very careful when you agree on the amount of the mortgage payments. In my opinion investment properties that have combined mortgage payments higher than 50% of the scheduled income are a bit too risky, unless of course, you have adequate back-up resources to pay for negative cash flow.

I’m always satisfied when my mortgaged properties earn me a small positive cash profit consistently every month. Little profits allow me to buy more properties, which in turn provide additional little profits! First thing you know, little profits add up to big bucks.

Walt Disney was delighted to draw the first cartoons that moved on a big theater screen. He was paid just $12 apiece for each one, but he kept drawing lots of them, over and over again. Needless to say, his $12 drawings eventually made Disney a very wealthy man. It didn’t happen overnight, by any means, but when you consistently keep the profits rolling in, you have the money to take on bigger and better opportunities when they present themselves.

There Is No Substitute for Cash Flow

There are several good economic reasons why I favor keeping a flock of rental houses but the reason dearest to me is – they furnish me with a pocket full of cash every month, come rain or shine! Over the years, as the mortgages are retired (paid off) I have extra cash on hand to buy discounted mortgages, including buying back my own debt. It’s a very lucrative companion business to my real estate investing.

In my opinion, nothing comes ahead of cash flow! If you have it, you can continue to grow. You can transition from smaller properties to larger ones or fixers to pride- of-ownership. You can use your cash flow to buy mortgages for passive income or take a trip around the world every month when the rents come in. Cash gives you choices!

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Phoenix Multifamily Market Continues to be ‘Bright Spot’

The Phoenix multifamily and condo market showed big improvements in the first quarter, the National Association of Home Builders reports. NAHB’s latest Multifamily Production Index, which measures builder and developer sentiment over the multifamily markets, reached its highest reading since the third quarter of 2005.

This marks the seventh-consecutive quarter the index has posted gains.

“In spite of continuing difficulties in the capital markets, it appears that new construction is underway,” says W. Dean Henry, chairman of NAHB’s Multifamily Leadership Board. “This is certain to help satisfy some of the pent-up demand that has occurred over the past several years.”

Vacancies in multifamily housing remains at low levels, according to the index.

“Multifamily construction continues to be a bright spot in the overall housing market,” says David Crowe, NAHB’s chief economist. “However, as indicated by the [index], demand for apartments is now quite high, and production is still very low in a historic context and in the context of what we project is necessary to meet long-term demand.”

Apartment buildings for sale in Phoenix are selling right and left. The time to find a good deal and buyer is now. Thousands of people that lost their homes to foreclosure are now creating a hugh demand for Phoenix income property.

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