Consumers...are you flipping houses or are you flipping hamburgers?

I am not tying to offend anyone but I want help stop any more people from making a terrible mistake by getting involved in a very difficult situation. 

There is a big game that you can play out there in Real Estate land. You can either play the game hard or you can play fair. It is called house flipping. There is the major leagues and the minor leagues. You can choose your destiny if you play right. But if you play with the big boys you better be able to play at all time.

It's not a game for everyone but there are different levels of investors who know and do not know how to play the game. It can be a very dangerous game to play if you don't play by the rules. You can play hard or you can just play for fun. If you can get good at it then you will flourish and make some money. If you go into it thinking you can make a quick and easy deal..then the only thing you might be flipping is a bunch of hamburgers when you lose your shirt. Investing can be fun if you do your home work. But I can tell you from experience that if you are not careful you might else every hard earned dollar you ever made just so you can jump on the bandwagon.

From 2002 until now I was teaming up with a few people and we purchased about 15 properties in Broward County Florida. We made money on all of them except one and after 5 contracts falling through...we rented it out. We rented some but sold them at a later date. Here is where most wanna be investors made their mistakes over the last year or so. Expensive new construction and or condo conversions. People would flock to any developer advertising these properties. what attracted any Tom ..Dick or Harry would be the incentives of not having to put at least 20% down and not having to close on these properties for anywhere from a year or more. They would just figure what the com-parables were going for at the time they went to contract...then they would use hard money and were just betting the market would continue to rise and by the time they had to close the property was worth well beyond what they purchased it for. This is what we call speculating. And it worked...."sometimes."

I know it worked because I was part of it. The only difference with me was I was more conservative and did not do it alone. Instead of buying a property for $500,000 and betting that it would be worth $200,000 more when it finally closed...I would take my own money and diversify it by placing it on 3 properties instead of that one big one. This way I didn't have as high of a liability to lose and I didn't need to take out a mortgage because I would team up with two of my partners and this way we each had a smaller liability but a smaller spread. I am sorry but Real Estate-Cash is King .This way I would end up making the same amount in profit with three instead of relying on one. Another problem many investors didn't realize was they couldn't flip every property quick because most buyers would come in with financing but the lenders would want to make sure their loans had to be seasoned for at least 3-6 months which caused many contracts to fall through or be extended and people lost deposits.

In the mean time the investors weren't aware of this and were stuck carrying the properties longer..therefore not making  as much after they would finally close. The worst part of it is this game can be that it is very addicting and tempting with those "large returns"  investors were going out of control. Some people didn't expect that they would have to take ownership and have to carry these properties and their hard money interest only mortgages were costing them thousands of dollars each month. Now many of those people are having a hard time keeping up with their primary residences and don't have full time jobs since they were only relying only on flipping. Now most of them have to go back to work just so they can bring home some sort of income. The same goes for all the Realtors® that were buying and selling their own properties but now find themselves out of the business after they found out they couldn't survive.

Here are a few tips that I would like t share with you. They worked for me.

• Make a plan...
• Budget your money wisely. Make sure there is a surplus that includes carrying costs.
• Don't just rely on photos...you need to physically preview the com-parables.
• Don't buy on impulse or emotion.
• Remember large purchases can also be a large debt and liabilities.
• If you have the funds available then diversify. Don't put all your eggs in one basket.
• Use cash if you can.....take on a partner.
• Do the numbers
• Stay in control and have fun

The only advice I can give someone looking to buy investment property now is that it is a great time to buy but if you are looking for the fast buck...the stakes are very high and you better be prepared to carry these properties.

It can be a fun and a very lucrative way to make some extra money...but you also could be playing with fire...so do your homework......be careful and know what you are doing.

If you are interested in Real Estate for sale  in Florida ......then we strongly urge you to look at the opportunities available here.

Please visit my blog The Real Deal tells it like it is in Real Estate-

For more information please contact Neal The Real Deal Bloom -REMAX Hometown

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