For the past 4-5 years I have been openly talking about the three ways to make money from property investment. I did this with good reason even though I knew of a fourth and potentially very lucrative way to make money out of property.
This week’s property investment news
The reason for the secrecy of the fourth way is that its a very easy strategy for unscrupulous companies to sell to uneducated and ill-experienced property investors; to add to this it’s an extremely dangerous strategy in the wrong market.
The past 4 or 5 years has been the wrong market. That’s right 2005 through to early 2009 has been the wrong market.
Plain and simple, it’s one of the reasons as a company we have steered clear of this strategy.
This fourth and final strategy which I will add into your strategy mix is flipping.
Flipping is an investment strategy whereby you actually make money from a property you will actually never own. You buy it low and find someone to buy it higher. This is achieved through either great negotiation skills or through waiting long enough for the market to grow the value of the property.
Now before you run off and think that flipping is the new fad, that you’ll make quick and easy money. You won’t. Not by any stretch of the imagination. Now sure once the market has recovered and things are back on the boil you will clean up using the principles we teach and applying the flipping strategy.
I am just extremely cautious as the strategy is easily sold as easy riches by unscrupulous salespeople. You need to made aware of the risks associated with property flipping.
As a rule I always say that you must have the money to complete on every property you buy otherwise don’t do it. It’s just far too great a risk.
So great, now that we have that out of the way let me also put a limiter of the strategy. Flipping at this stage of the market is (June 2009) is unlikely unless you are doing long term off-plan. I see it being possible maybe in 2011 or 2012 as long as the property has good solid fundamentals.
I genuinely believe that by this stage the market will have sufficiently recovered and the risks of off plan will be minimized.
Give it enough time for the recovery to take hold and every company and their dog will be telling you just how great a strategy that flipping is.
I have to agree flipping in the right market is a great investment strategy but remember that if you flip it you won’t own the property and this goes against our portfolio building strategies.
Live with passion,
PS. The three other ways are having your property cash flow positive, selling and remortgaging your property.