Realty 411 - Is Flipping Property Good for Your Wealth? Tips from Kathy Fettke, from Real Wealth Network

1. Is Flipping Property
strategy
by Kathy Fettke, CEO
of the Real Wealth Network
Good for Your Wealth?
T
V shows make have had to put down
flipping houses $13,000 to buy real estate.
look easy, and Today that property
bootcamps would be completely paid
make it seem extremely off, and would have more
profitable every time. than tripled in value.
But in reality, new inves- What’s more: you’d be
tors often get burned on earning at least $13,000
their first few deals. rental income per year!
Everyone wants to The same power of multi-
make a quick buck, and plied growth is available
in theory, flipping could today simply because
be a way to do that. But prices are so low.
please heed this warn- Real estate bought
ing: Flipping is not for today could very well be
everyone! worth more than three
Here are some tips to times its value 20 to 30
help you decide if it’s for you. years from now. There is no other
investment that delivers cash flow and
The Real Costs of Flipping Property • Flipping requires hands-on involvement capital growth like long-term real estate
There are many hidden costs that new and most working people don’t have the investments do.
investors fail to calculate on the outset: time. Flipping is a job. Buying and holding
• The cost of funds borrowed to purchase • Successful flipping requires that you property is an investment.
and/or renovate the property only invest where you physically live. A
• The cost to sell, including agent fees and buy & hold investor can invest anywhere, Kathy Fettke is the founder and CEO
closing costs — estimate 10% have many investments working at the of Real Wealth Network “The Real
• Holding costs, including on-going prop- same time, and still make money Estate Investors Resource.”
erty taxes, interest charges, and insurance doing other things. Members have access to free
• Cost overruns — always allow a 10% • A cash flow rental property education, resources, and
cushion for the unexpected can yield over 10% return after referrals to turn-key rent-
• Sales price variations — allow 10% less all expenses, without the risk of al properties around
than what you’re expecting rehabbing and trying to sell the United States.
• Estimated profit — 10% at a minimum at the right time. Real Wealth Network
(and if this is all you’re expecting, there • Rental has over 8,000
are much lower risk investments out income is members, so the
there!) much more shear power
• Short-term capital gains taxes — poten- favorably of numbers al-
tially 35% of your profit. Always talk to taxed, and lows the group
your CPA before making any investment. capital gains can be to acquire
avoided upon sale if a properties at
As you can see, after you calculate all replacement property is huge discounts.
repair costs, you’ll still need to be able to purchased according to Membership is
acquire the property for less than 60% of IRS 1031 Exchange Rules. free. Kathy is also
current market value. • Growth over time, for both host of The Real
Is it possible? Yes. Is it easy? No. rental income and capital Wealth Show on KABC
growth, works the same as Los Angeles and on iTunes and is
Buy & Sell VS Buy & Hold compound interest; it’s one of a regularly interviewed guest ex-
At Real Wealth Network, we advocate the most powerful tools in an pert on ABC, CNBC, CBS Market
buy & hold investing for the following investor’s arsenal. Watch and NPR.
reasons: Thirty years ago, one would