Money Monday: Growing Wealth, part two

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Flipping Houses May Not Be for Everyone. Find out if You Can Do it.

Today’s Money Monday is the second in the growing wealth series . Last week I opened up the series with building wealth through real estate. However, if you are going to build wealth through real estate it is important to focus on one or two areas initially or become a specialist in those areas if you are going to be successful. One of those areas would be purchasing property, fixing them up, or rehabbing them, and then selling for a profit. In real estate language that is called flipping or flips. Let’s look at fundamentals of building wealth through flips.

Flip Investor Mindset

What type of places should you consider when building your wealth through flips? Generally investors identify hot areas where you can purchase low and there would be instant equity built into those locations. While there is nothing wrong with that approach and those locations, the question is if you are depending on appreciation only to make a profit are you investing or speculating? Investors would not only consider appreciation, but also purchasing a property at a good price, adding targeted intentional strategic value and dispensing with the property for profit.

Flip Investor Factors

If you are pursuing flipping with the correct mindset, then you will have to make certain determinations, such as would you purchase property very far from your current location, or where you reside? Because as a flipper investor, proximity will matter as you will need to frequently engage and visit your property. Travel can play a significant part with your time investment.

Sales activities play an important part in areas where you invest. Most of your sales activities of neighborhoods and locations can be obtained from your realtor MLS system. While the system can provide lots of reports, some of the key data you need to obtain are, the price per square footage, property taxes, days a property remains on the market, and the number of days property sells in the location under consideration for investment.

The age of a property is another significant factor and MLS data point worthy of obtaining. Older houses or locations tend to have lots of built in equity in those neighborhoods. However, they may come with significantly more fixer- upper costs and time delays. In the flipping investment business time is truly money! The sooner you can have the repairs made and the property ready for sale,  the greater your profit margin. Here appreciated property verses turnaround time is the key.

Sources of Properties

Everyone in this business is looking for the same thing you are looking for, and that is property to flip. In today’s market and world, some sources are not as valuable as they once were. For example, the real estate classified ads in your local newspaper may not be a significant resource as it once was. Not that you should not look there for opportunity, but that the world of finding property to flip has changed. Perhaps your two most rewarding sources will be networking with others and the MLS from your real estate agent.

Takeaways

Building wealth through flipping can take some time and you have to manage several factors, some of which are entirely out of your control such as obtaining local permits and licenses. It is also time consuming as all serious investments are. Even more than finding money to purchase, repair, and sell, is your time commitment. If you’re not serious, this wealth building option is not for you and you should explore another path to wealth.

WHAT’S UP!

Today’s What’s Up is about new laws in effect from July 1st, 2024. You may not have been paying attention, but did you know that many new state laws take effect on July first? Well if you didn’t know, here are a few you need to know about.

In New Jersey there will be an increase in the gas tax; in Minnesota there will be a fifty cent retail delivery fee tax on transactions greater than $100 for retail delivery within the state; in Maryland some tobacco products will increase from 53% to 60%. The advice here is to check with your state to know if any changes in the law will impact your finances and thus impact your budget. And that’s what’s up!

Ruthven R. Phillip, Esq., is a tax attorney, Stewardship and Philanthropy Ministry Assistant, and CEO of Give2Getrich, LLC. Give2Get Rich, LLC 2024. All Rights Reserved. Any distribution or reproduction of part or all of the contents in any form is prohibited.

 

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