We understand the idea of buying a property in disrepair, fixing it up, and selling for a profit has been around for many, many years.  In fact we have engaged in this wonderful investment vehicle in the past, but where do we turn in a declining market, when profits on the flip might be tight?  The equity market is an option, but let us never forget the cardinal rule.  Buy low, sell high.  Your best opportunities might lie in today’s real estate market.  How can you capitalize on these opportunities?  Simple, prepare a sound, long-term rental plan.  Buy now, rent now, and sell in the up market.

As we all know, a good investment decision is predicated on a solid review of the numbers.  For the purpose here, we’ll take a $100,000 property that needs about $10,000 in repair to get it up to speed.  This means we’ll need about $35,000 in cash to purchase this $100,000 asset.  After the updates and finishing touches, we are ready for tenants.  The current renal market will yield us $1,500 month.  That’s $18,000 over the year.  From this we’ll subtract our carry cost, taxes, maintenance expense, and vacancy.  This yields us about $3,000 in positive cash flow.  That’s an estimated 10% return on our cash (that’s pretty darn good!).

Of course, we also have the appreciation of our property.  We all know the roar of the real estate market has been reduced to a whimper, but using the historical appreciation rate for real estate of 3% per year, coupled with the 10% annual cash return and we have some pretty nifty returns.  Not to mention, the possibility of zero capital gain taxes!

So you decide, flip this house or rent this house?

If your interested in learning more about real estate feel free to contact Eric Rehling Direct: (215) 256-8026 Mobile: 215.256.1200 

Also visit Eric at www.MovingRights.com

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By:  Eric Rehling Eric@mittmanrehling.com

Eric Rehling is a regular contributor to InsuranceHeadlines.

Editor: InsuranceHeadlines.com