Real Estate has always been a tried and true type of investment that can offer both short and long-term gains, is relatively safe and creates wealth for millions of investors year after year. But, before you purchase a property you must determine if you want to flip the property or rent it out. We all know how the real estate market fluctuates, sometimes we are in a buyer’s market and sometimes we are in a seller’s market. What you do with your investment may depend on what is happening in the market and how much you pay for an investment property.

Knowing When to Flip a Property
Buying a property and selling it fast, a.k.a. “flipping”, can provide huge profits if done right. The key factors to look at are the purchase price, the condition and location of the property and knowing how to “comp” or determine how much comparable properties are selling for (and how fast!).

Generally speaking, if you plan to pay a lot of money for a single unit investment property, your best bet is to turn it around quickly and flip it. Expensive investment property comes with big property tax payments and big mortgages, which usually will rule out any cash flow for renting. Locating renters for higher priced homes can be difficult, and if they miss a rent payment for one or several months your cash flow may not only totally disappear, but you may take a loss.

If you can buy a property at wholesale prices that only requires cosmetic changes, you should be able to flip it for a nice easy profit. Look out for property with major structural problems, a.k.a. a “money pit”, especially if the price was priced high to begin with. Before you buy property that needs any major repair be sure to assess not only your financial resources, but also the resources of your work force. Do you already have relationships with different types of contractors and other skilled labor professionals? Just be sure to look at the whole picture before you decide to flip a property.

How to Know When to Rent a Property
If you’re looking for a nice monthly cash flow and building equality over time, you may want to rent your investment property. Renting is generally a much safer type of real estate investing. The key factors to look at are the price of the home, if the area where you are investing has growth potential, and the condition of the property.

Lower-priced investment property will translate into a lower monthly payment, lower property taxes and lower priced insurance. You can buy several lower priced investments and spread out your risk of both tenants that don’t pay and buying a property that turns out to be a money pit. Remember, when you’re renting out a property you are building equity by using your tenant’s rent money.

You also want to determine if the area where you are investing in is growing. Do you notice a lot of new construction in the area? Do you see new business moving in? Is the location near an urban area, with plans for a new infrastructure? Properties located in growth areas almost always net the largest gains over time.

When you invest in a growth area you can make money flipping a house, but you may be able to make considerably more money if you rent it out, build equity, and sell it for a much higher price at the optimum time. You may not make as much cash-flow in a growth area, but the property value may go up so fast that cash-flow doesn’t matter.

It’s Not Just About the Bottom Line
Deciding whether to flip or rent out a property is not easy, assess the market, do the math, and then consider your own interests and abilities. The perfect flip may not be for you if you have no construction or renovation experience, and becoming a landlord may just not be for you period. In the end, it’s not just about what’s best for your pocketbook; it’s what’s best for you.

Video related to property and creating wealth

Carly Crutchfield takes you into the world of property development in this montage of clips that gives you some quick tools and tips that are priceless, unforgetable and all about creating wealth and achieving the life you want.

Frequently question about property and creating wealth

- John D. Rockefeller

“Buy real estate in areas where the path exists…and buy more real estate where there is no path, but you can create your own.”

- David Waronker

“A man complained that [on] his way home to dinner he had every day to pass through that long field of his neighbor’s. I advised him to buy it, and it would never seem long again.”

- Ralph Waldo Emerson

“My own recipe for world peace is a bit of land for everyone.”

- Gladys Taber

“There have been few things in my life which have had a more genial effect on my mind than the possession of a piece of land.”

- Harriet Martineau

“The small landholders are the most precious part of a state.”

- Thomas Jefferson

“Land monopoly is not only monopoly, but it is by far the greatest of monopolies; it is a perpetual monopoly, and it is the mother of all other forms of monopoly.”

- Winston Churchill

“I have always liked real estate; farm land, pasture land, timber land and city property. I have had experience with all of them. I guess I just naturally like ‘the good Earth,’ the foundation of all our wealth.”

- Jesse H. Jones

“It is a comfortable feeling to know that you stand on your own ground. Land is about the only thing that can’t fly away.”

- Anthony Trollope

“Landlords grow rich in their sleep without working, risking or economising.”

- John Stuart Mill

“Buying real estate is not only the best way, the quickest way, but the only way to become wealthy.”

- Marshall Field

“Land increases more rapidly in value at the centers and about the circumference of cities.”

- William E. Harmon

“The best investment on earth is earth.”

- Louis Glickman

“Buy on the fringe and wait. Buy land near a growing city! Buy real estate when other people want to sell. Hold what you buy!”

- John Jacob Astor

“Find out where the people are going and buy the land before they get there.”

- Will Rogers

“Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth.”

- Theodore Roosevelt

“Ninety percent of all millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate.”

- Andrew Carnegie

“The West is the best, get here and we’ll do the rest.”

- James Douglas Morrison

“I advise women to invest in real estate. It is the collateral to be preferred above all others, and the safest means of investing money.”

- Hetty Green

“No investment on earth is so safe, so sure, so certain to enrich its owners as undeveloped realty. I always advise my friends to place their savings in realty near a growing city. There is no such savings bank anywhere.”

- Grover Cleveland

“Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.”

- Franklin Delano Roosevelt

“Real estate is the best investment for small savings. More money is made from the rise in real estate values than from all other causes combined.”

- William Jennings Bryan

“Real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security.”

- Russell Sage

“Don’t wait to buy land, buy land and wait.”

“Buy land. They ain’t making any more of the stuff.”

- Will Rogers

“I would give a thousand furlongs of sea for an acre of barren ground.”

- William Shakespeare

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Kevin Kiene -
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Limited time offer, download Free Landlord Forms! Make more money every month and take control of every rental situation. Create a State Specific Lease or an <a rel=”nofollow” onclick=”javascript:pageTracker._trackPageview(‘/outgoing/article_exit_link’);” rel=”external nofollow” target=”_blank” href="http://www.ezlandlordforms.com/documents/72/">Eviction Notice</a>. Download from a complete library of Landlord Forms.

Consider expanding your service offerings to include mortgage services.  Mortgage services are extremely profitable.  Many states only require one or two courses to get licensed, and you may be able to use the loan officer course to get MCE credit for your real estate license.

You probably have a large pool of prospective investors with adjustable rate mortgages who need to refinance their mortgage. Why refer this business, when you can easily provide this service. You already have an established relationship with each owner.  If you own your office, you may even consider subleasing space and partner with a mortgage broker. Our in house mortgage broker pays us rent and refers real estate and property management business to us. This drastically lowers the overhead cost for both companies.

In my last article, I discussed how 2008 will be a great opportunity to purchase rental property from motivated landlords with negative cash flow properties.  As property managers, we can easily achieve instant equity by purchasing property below market and earning a commission at closing. We can increase our return on investment with monthly cash flow, appreciation, principle reduction, and tax savings by depreciating rental property. However, only licensed real estate professionals can use rental property to generate business income.

No other investment can potentially offer a greater return for a property manager than investing in rental property.  Our company provides maintenance, sales, leasing, property management, and mortgage services. We leverage all of our services to generate as much revenue per client as possible.  We offer a one stop shop for all our customers. 

As a licensed real estate broker and loan officer, we generate thousands of dollars each year by assisting tenants living in rental properties I own to purchase homes. We assist tenants in repairing their credit, obtaining a mortgage, representing them as a buyer’s agent, and utilizing our in house maintenance company to help them fix up the property or make any necessary repairs. Not only are tenants happy to utilize our services, but they refer business to us as well.

In our market, there is a huge demand for home buyers who just sold their home and need a place to park while they build a new home. Yet few property managers offer lease terms less than six month, because short term leases are not profitable for the owner. I fill this market demand with properties I personally own and network with Realtors and builders and offer short term leases for their clients and customers. In return, I ask them to refer my company future property management business. We will refer the owner back to the Realtor if they decide to sell the property in the future. This makes the sales transaction go very smoothly, and Realtors are thankful for us providing this service. We have obtained many property management referrals because of this service offering. Even the short term tenants have referred property management business to us.

The more properties you purchase, the more you can leverage your company’s services to generate business income. You will save thousands of dollars in income taxes each year by depreciating each rental property.  Owning rental property can lower your income tax liability to low single digit percentages. Some landlords with a large rental property portfolio pay no income taxes, because their depreciation expense exceeds their taxable income.

I encourage property managers to take advantage of near record low interest rates and purchase as many rental properties as possible. Leverage your rental properties to generate incremental business income.  

In my next article, I will discuss how licensed real estate agents can leverage rental property to generate additional business and tax savings.

Video related to property management

cmrpropertymanagement.com – Your property doesn&#39;t sell? Do you own real estate that doesn&#39;t make you money? Stop bleeding and let us help you! • Can&#39;t sell your property? Rent it! • Don&#39;t want to wait until the market improves to sell your home? Lease it with Option to Purchase! • Can&#39;t find tenants for your rental? Let us do the marketing for you! • Don&#39;t have time to manage your real estate investment? Let our professional property managers do it for you! • Can&#39;t deal with problem tenants? We&#39;ll do it for you! Carolinas Metro Realty helping property owners to manage their investments in Charlotte (North Carolina) and surrounding areas, whether it is residential or commercial property, single family home, condominium (condo), duplex, triplex, apartment complex, home for rent, lease or lease with option to purchase. We specialize in managing residential rental properties – homes, condominiums (condos), townhomes (townhouses), apartments, duplexes, triplexes and commercial properties – in the Charlotte region including Lake Wylie, Lake Norman and towns of Mint Hill, Fort Mill, Rock Hill, Tega Cay, Gastonia, Indian Trail, Harrisburg, Mathews, Mooresville, Waxhaw, Weddington, Uptown Charlotte, Huntersville, Pineville, Huntersville, Cornelius, Davidson, Denver, Mooresville, Troutman, Sherrills Ford, Catawba for individual owners, investors and corporations. We serve North Carolina, South Carolina, Mecklenburg, Iredell, Lancaster, Union, Gaston and Catawba counties.

Frequently question about property management

Thanks in advance!

About Author

Kris Colquette

Kris Colquette’s real estate website kcaustin.com is a fantastic resource for Austin Condos & Austin Foreclosures.  There is also a fantastic Flat Fee MLS Listing service available there! Enjoy the abundant Austin home information available and please don’t hesitate to contact me with Austin real estate questions.