We’d chisel it on Mount Rushmore if there was enough space, “Real wealth is created by buying and holding income properties.” What’s that sound? Probably property flippers jingling a few extra dimes in their pockets.
Sorry to be the bearer of bad news but, as a flipper, you’re going to have to keep working for that pocket change while the true investors are looking at a longer term horizon. Something in the way of three to seven years or longer.
One of the first problems flippers run into is thinking you can just go out and do it without having a good grounding in the fundamentals of real estate. If your idea of an investment plan is to drive down the street and buy the first ‘for sale’ property you see, hoping someone will pay you more for it tomorrow, good luck. That’s not an investment plan.
Sometimes housing markets become overheated and the buying and selling frenzy is entirely created by flippers doing business with each other. In this case, when the music stops there are many people left holding mortgages they weren’t expecting to have to pay.
Not to say you can’t make money as a flipper. Maybe you can. Maybe you’ll get lucky. But don’t fool yourself into believing you’re investing for your family’s future. Real investing involves income properties, the prudent use of leverage, and the patience of a minor saint.
Here’s a paraphrase from Wade Cook: “Do for a few years what most people won’t, and you can live the rest of your life like most people can’t.”
There’s wisdom in there somewhere.
