2011′s economy has been far from predictable, unless of course you own a crystal ball and perhaps a Ouija board. I say far from predictable because yes, we all assumed it was going to be a sluggish year, but we had some rollercoaster days on the market that made many skiddish. It made me think about the savvy real estate investors and what they are doing to weather the slump America seems to be in. As it turns out, this will be a series piece, as each investor is a little different and invest or make investment decisions differently.
Today we will start with the Fix n’ Flips. In 1998-2008 there was a wonderful decade made just for the Average Joe looking for cheap loans who could make a few improvements to a property and sell the house quickly making thousands. Then taking those thousands would reinvest in one or more properties and doing the same thing. Can this work in 2011? Perhaps. Mortgage rates are low, and assuming it is just the right piece of property, in the right neighborhood, and the right materials are used to make the new selling price appear to be worth it, then yes it is still profitable. However, it seems many Average Joes get stuck in a lurch in this economy trying to do this, so here’s another idea. Buy a very cheap property, stick a little cash into it to fix it up, and rent it. Go into any residential investment property with the understanding of holding on to it for at least 5 years. In that 5 years, a chunk of the mortgage will be paid off by others, and assuming the numbers and analysts on Capitol Hill are correct, we should see a much better economy by then, allowing you to sell the house (if you’d want to) for profit. What’s more, when you get a low mortgage loan and rate you can rent for a great (and fair!) price, and pocket the dividends or reinvest in another property.