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Real Estate Investing Update – Winter 2017/2018

With whole cable TV channels dedicated to the theme of Real Estate Investment, it is not surprising that the ranks of investors are growing crowded in many markets.   There are still great deals to be had, but finding them, being the first to get a good written contract with the owner, and not “giving away the farm” takes good counsel and a little luck.

I had the pleasure of speaking to a real estate investment group this weekend and it was refreshing to see a few dozen investors pooling their knowledge, know how, resources and visions to help one another maximize their investment activity.  They had invited a good CPA to come address tax considerations of real estate investing and a lawyer to address some of the legal challenges. Kudos to Sandra Musselwhite and her Real Estate Investor’s Group Meet Up.

On a micro scale, the average American has several main ways to break into real estate:  (1) keep your hands clean and buy and interest in a REIT (real estate investment trust) or stock in a real estate investment or finance company.   But that won’t give you a chance to learn to use a nail gun;  (2)   Buy properties to rehabilitate and resell, also known as “flipping”;    or (3)  Buy properties to hold and rent out, also known as becoming a landlord.   Flipping has been touted as the best short term return on investment with the fewest long term commitments required.  Chances of success are greatly enhanced if you have:  (1) a great acquisition strategy;  (2) some general contracting skills and/or the time, ability, and willingness to do physical labor; and (3) a good team behind you, e.g., realtor, tax advisor, lawyer.     But the pendulum may be swinging toward taking a longer term investment approach for the foreseeable future:

According to Realtor Magazine, Flipping profits are down in many markets.    Click on the link to see why investors are growing more cautious about flipping:    http://realtormag.realtor.org/daily-news/2017/12/08/investors-more-cautious-about-flipping.   I recommend taking some time to read this short but insightful article.