If the title describes ya, don’t get yer panties in a bunch — I’m just messin’ with ya. Still, I was trying to make a point: Just cuz you keep makin’ a profit on all those properties you keep turnin’ ‘n burnin’, doesn’t mean you’re necessarily an investor. Well, at least in the strictest sense. I heartily applaud your success, as you and I both know from hard earned experience that doin’ what you do isn’t, by any stretch of the imagination, easy — or a slam dunk to always provide a happy ending.
Sometimes rehabbers lose. In fact, you and I know that most rehabbers lose. They come and they go, licking their wounds, wondering where it all went wrong. Make no mistake, however, I have great respect for those experienced in picking out the right props, fixing the right stuff, and quickly headin’ out the exit door. I’ve done it myself, and not only with residential units.
The flaw in the fix ‘n flip strategy is that it’s an ever faster treadmill to…nowhere.
Don’t laugh, but I’m gonna be relatively short and sweet tonight. 
If you’re just beginning down this road, find someone who’s been doin’ it right for at least a few years. They’ll testify what I’m about to say is true. Outside of an improved lifestyle? They’ve produced absolutely nothing, as in zero, zilch, nada that’ll do squat for their retirement.
Wait, it gets worse.
Find a really successful fix ‘n flipper who’s quit their day job. Ask them about all the money they make, they’ll love tellin’ you. What they may or may not have realized yet, is that they now have their own personal treadmill spinnin’ in overdrive. A merry-go-round gone amuck without a seatbelt or brakes.
And they can’t get off. If they’ve had that terrible epiphany, the one illuminating the Catch 22 they’ve created for themselves, they’re doin’ the best they can to figure out how to get a couple things done.
1. Get off the treadmill without crashing their lifestyle. Much easier said than done.
2. Figure a way to establish a credible retirement plan to generate decent income so they can actually, you know, retire — before they’re 75.
Again, this isn’t to talk you outa that side of real estate investing. It’s to try and catch you early enough to get you to see your need to be simultaneously traveling down both the short AND longterm roads. Do the former without the later, and the older you get, the more trapped yer gonna feel.
BawldGuy Axiom: Real estate investors can have their cake and eat it too — long and short term strategies. They can do incredibly well with the long term approach by itself. They will not, no exceptions, even make it into retirement solely executing the short term profit making strategy. That particular brand of treadmill is unforgiving.
The good news?
There are superb strategies allowing for the successful blending of fix ‘n flip with longterm real estate investing for retirement. Let me show you. Realize though, that time ain’t yer friend.
Meanwhile, back at BawldGuy Ranch — the BawldOperator is awaiting your call — he needs a fix. Call 1 (619) 889-7100. Have a good one.
Related posts:
- Real Estate Investor: Stop Flogging Yourself — Just Don’t Repeat Your Timing Mistake
- Do Not — Repeat — Do Not Buy Income Property In San Diego
- The Best Of All Worlds — Sell & Pay No Taxes — No 1031 Exchange
- San Diego Real Estate Investors Are Frustrated — Their Properties Didn’t Sell
- Preparing To Sell Income Property The BawldGuy Way
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Most definitely on point. I have seen more flippers quit than I can count. It’s really a tough business to do successfully (and profitably), which requires a good analytic mind, problem solving skills, and an eye for finding the right property. RT’ing this point, Jeff.
I always thought the point of fix and flip was to raise capital for investing long term. I have no statistics, but I assume by your article that most do not do this.
Alex — Good to hear from ya. Not only is flipping props much more difficult than the public has been led to believe, the majority simply experience a total fail.
Bilgefisher — Most of ‘em get caught in the trap of immediate profits and ignore anything longer term than finding the next deal. It’s usually the very good ones who figure out they better do something longer term than a few months. It’s often the older, more experienced flippers. They begin to tire of the constant pressure/hard work, and wonder what they’re gonna do in 10 years for income.
It’s at that point the epiphany hits ‘em between the eyes — “Man, I’ve totally screwed the pooch”. It can’t be a happy feeling.
Hey jeff,
I have never forgotten my first rehab where I lost $15k in 1996! I had really enjoyed the entire process right up until closing!
Fortunately, a new neighbor who lived a couple doors away shared his experiences with me and on the 2nd deal we truly bought the house right and didnt overspend on the rehab–we made 50k on that one and the next 4 were at least as good.
And as you suggested my partner and i put most of those profits into quality of life
purchases rather than into long term real estate holdings.
the biggest issue with Flips would have to be the potential tax rates on gains, not sure exchanges are always practical on these deals.
Our most recent major rehab and hold project went pretty well for all concerned, but it is so much work that I am sure that spending more time in this market and uncovering the best deals (not needing rehab) is a much better use of time.
And mostly, I am now convinced that buying cash flowing newer properties and holding them with professional management is the best long term retirement strategy–AS YOU SO CLEARLY RECOMMEND.
jeffrey gordon