Cash for today or wealth for tomorrow? That is a great question that investors must continue to ask themselves. In today’s real estate market we are experiencing the greatest transfer of wealth of our generation. The sub-prime mortgage crash has created an unlimited amount of distressed properties that can be purchased at big discounts. The buying opportunities today can provide great investment opportunities for the investor. With the ability to buy real estate far below value the investor will have the opportunity for large equity gains on the acquisitions made. With the equity gains the investor must determine the proper exit strategy to capitalize on this market.

Once the acquisition has been made the investor has the opportunity to fix up and then re-sell the property at a great profit. Today’s distress properties have revitalized the potential to fix and flip houses in 2009. The primary difference in today’s opportunity is that this can be done in nicer neighborhoods than in the previous height of the market of 2006 – 2007. This is due to the high inventory of distress properties now available. One other major impacting factor is the market created for first time home buyers looking to take the $8,000 tax credit from our government. This is a huge incentive that has created a lot of new buyers this year.

A typical fix and flip in our market in Richmond, VA will look like this: Purchase price: $90k Repairs to house: $20k Re-sell house: $150k Flip profit: $40k You may be asking yourself why you would ever consider not selling a house today for a $40k profit. These types of deals can be acquired on a regular basis if you are active in the market and making offers continually as we are. My wife Cheryl and I have active discussions on exit strategy when we make these types of acquisitions. Cheryl really does not want to re-sell all these houses for the fast profit in 2009. She would prefer to hold onto them as rentals for the next several years. Why would she want to do that? Many of us believe that our government spending is vastly out of control with bailouts, cash for clunkers, heath care, etc. This spending will potentially follow with a run up in inflation, potentially hyper-inflation.

What if you hold onto these properties rather than selling them all for a profit today? While experiencing the greatest transfer of wealth of our generation you can collect income producing assets that will provide you with a nice rental income stream. You will enjoy watching your net worth skyrocket and begin to enjoy steady income from your rents. If you are fortunate enough to own a collection of properties and we do experience any level of inflation you will enjoy watching the appreciation multiply your net worth faster than you thought possible. So should you enjoy cash for today or wealth for tomorrow? Only you can answer that question.

It may depend on your current situation regarding to personal debt, income, planning and ability to fund the deals. I encourage you to build a simple plan and consider a mixed-exit strategy where you sell some for income today and hold the others for wealth tomorrow.

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