STRATEGY
INVESTING IN RENTALS
ing relationships with experienced house flippers is they will become familiar with your acquisition re- quirements for investment. They can, over time, be- come an extension of your strategy, shopping specifi- cally for homes and opportunities that meet your require-
ments. Ideally, you’ll tell them
exactly what you're willing to spend for
a home in a given area, and exactly what you want for your monthly cash flow and they’ll go out and find it. You can even be proactive in of- fering suggestions and adjustments within the renovation budget that will meet your investment needs and the profit needs of the house flipper. If you're well-funded, you may even be able to offer funding for the rehab for reduced pricing or a generous short- term return before you acquire the home and convert it to a long-term rental property.
Instead of Flipping Houses, Become a House Flipper's Buyer RENTAL-PROPERTY INVESTING TO BUILD YOUR PORTFOLIO.
SMART FLIPPING Many more house flippers are selling to real estate investors. The smart flippers know that an investor can be one of their most prized cus- tomers, so they select homes with that customer in mind. Smart flip- pers will also study the local rental market trends, tenant demographics, and cash flows that an investor will accept. The house-flipping strategy these flippers implement is to buy at a discount, rehab the home afford- ably, and sell to a rental real estate investor with an analysis of what the home will rent for and the expected cash flow. It's smart, and it works. The best part is, you can become that buyer! Of course, you'll need to have the funds ready and available to buy the homes for cash or with some leverage, but the good news is, you can
arrange funding in a number of ways. Some rental investors take on partners, while others use their current assets as backing for lines of credit to pur- chase rental homes. If you’re currently flipping houses, then consider putting away a percentage of your profits into a rental bucket to use as a down payment for financing. How do you win with this strategy? As your tenant pays your mortgage for you, your equity in your rental property increases and you may even see the benefit of appreciation over the long term. Eventually, you can use the equity in the rentals you own to fund purchases of other income-pro- ducing property.
by Abhi Golhar
CREATEAFLOWOF OPPORTUNITIES The goal here is to build relationships
V
isualize a retirement in a paradise area of your choice or, more realistically, even more than one seasonally. Think of having a constant cash flow that eclipses any reasonable risk-adjusted invest- ment returns from stocks, bonds, or savings accounts. Rental-property
investing is the way to build and grow a portfolio over time that will fund the lifestyle, retirement, and future healthcare needs you may require. While TV shows you see about flipping houses for fast profits can be fun to watch, consider who is buying many of these flipped properties.
Sure, some are sold immediately on the open market to homebuyers, and some listed with real estate agents. However, the costs to the flipper can increase tremendously due to commissions, marketing, and a longer holding time, depending on your market.
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Abhi Golhar is a full-time real estate investor, Think Realty coach and host of Think Realty Radio. Connect with Abhi at BookWithAbhi.com.
WORKINGWITHYOUR HOUSE FLIPPERS The biggest advantage of cultivat-
34 | think realty housing news report :: april / may 2019
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