Even though I’ve had the opportunity to flip the homes I’ve bought, and even though I’ve represented my own clients who’ve flipped real estate for massive profits, this is why I’ve preferred NOT to flip properties and instead, keep them as rentals. Add me on Snap/Insta: GPStephan
Learn how to make money as a Real Estate Agent, build your network of clients, and the exact steps I’ve used to grow my business from $0 to over $120 million in sales: $50 off with code ThankYou50 for a limited time: https://goo.gl/UFpi4c
To me, my priority and focus has been to build up my passive income as much as possible, year after year- so far, in the 6 years that I’ve been investing, my income from my rental properties covers pretty much all of my expenses, allowing me to save 100% of what I make from working as a realtor.
This is the type of investing I prefer - partly due to laziness in that I can continue to increase my passive income and grow that up to be able to retire whenever and have total freedom to do what I want, when I want, and partly because it’s less time intensive than flipping properties. I take a very lazy, easy approach to real estate investing. It’s slow and steady wins the race attitude. Once you set up a rental property with the right tenants, it can pretty much run on its own, making you money while you sleep.
Disclosure: People can make a lot of money flipping. This isn’t to say that it’s not very, very lucrative - I know and have represented people that have made hundreds of thousands per deal. It can be a great business to be in and there’s absolutely nothing wrong with it. Everyone’s goals are different and many people prefer the immediate profit of a flip - But here are my own personal reasons why I prefer to keep my properties as rentals.
1. It’s a lot of work to flip a property, especially in a competitive market. Inventory is low and finding a deal worth flipping could take months. While it can generate a lot of profit immediately, it requires your constant work to keep the momentum to continue flipping.
2. When you sell it, you pay taxes as ordinary income - not long term capital gains, which is taxed much less.
3. Market timing. Finding a good deal could take months in Los Angeles…add another 2-3 months of renovation, and another 30-60 days of having the house on the market before closing, and you’re looking at 5-9 months from start to finish per deal.
4. Profit. Given the amount of work and time I’d dedicate to flip a property, it doesn’t make sense for me when it takes my time away from my main focus, which is working as a Realtor.
5. If the property has that much equity in it that you can flip it for a profit, chances are you can charge much higher rents than before, improving your cash flow.
For me, I’ll take passive rents without doing much - it just requires some upfront work and an initial upfront investment, but once you get it going, it can run for a very long time. Having this type of passive income really allows you the freedom to do what you want, when you want - and focus on what really brings you the most joy. For this reason, I prefer rental properties over flipping.
For business inquiries, you can reach me at GrahamStephanBusiness @gmail.com
Add me on Snapchat/Instagram: GPStephan
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
Learn how to make money as a Real Estate Agent, build your network of clients, and the exact steps I’ve used to grow my business from $0 to over $120 million in sales: $50 off with code ThankYou50 for a limited time: https://goo.gl/UFpi4c
To me, my priority and focus has been to build up my passive income as much as possible, year after year- so far, in the 6 years that I’ve been investing, my income from my rental properties covers pretty much all of my expenses, allowing me to save 100% of what I make from working as a realtor.
This is the type of investing I prefer - partly due to laziness in that I can continue to increase my passive income and grow that up to be able to retire whenever and have total freedom to do what I want, when I want, and partly because it’s less time intensive than flipping properties. I take a very lazy, easy approach to real estate investing. It’s slow and steady wins the race attitude. Once you set up a rental property with the right tenants, it can pretty much run on its own, making you money while you sleep.
Disclosure: People can make a lot of money flipping. This isn’t to say that it’s not very, very lucrative - I know and have represented people that have made hundreds of thousands per deal. It can be a great business to be in and there’s absolutely nothing wrong with it. Everyone’s goals are different and many people prefer the immediate profit of a flip - But here are my own personal reasons why I prefer to keep my properties as rentals.
1. It’s a lot of work to flip a property, especially in a competitive market. Inventory is low and finding a deal worth flipping could take months. While it can generate a lot of profit immediately, it requires your constant work to keep the momentum to continue flipping.
2. When you sell it, you pay taxes as ordinary income - not long term capital gains, which is taxed much less.
3. Market timing. Finding a good deal could take months in Los Angeles…add another 2-3 months of renovation, and another 30-60 days of having the house on the market before closing, and you’re looking at 5-9 months from start to finish per deal.
4. Profit. Given the amount of work and time I’d dedicate to flip a property, it doesn’t make sense for me when it takes my time away from my main focus, which is working as a Realtor.
5. If the property has that much equity in it that you can flip it for a profit, chances are you can charge much higher rents than before, improving your cash flow.
For me, I’ll take passive rents without doing much - it just requires some upfront work and an initial upfront investment, but once you get it going, it can run for a very long time. Having this type of passive income really allows you the freedom to do what you want, when you want - and focus on what really brings you the most joy. For this reason, I prefer rental properties over flipping.
For business inquiries, you can reach me at GrahamStephanBusiness @gmail.com
Add me on Snapchat/Instagram: GPStephan
Suggested reading:
The Millionaire Real Estate Agent: http://goo.gl/TPTSVC
Your money or your life: https://goo.gl/fmlaJR
The Millionaire Real Estate Investor: https://goo.gl/sV9xtl
How to Win Friends and Influence People: https://goo.gl/1f3Meq
Think and grow rich: https://goo.gl/SSKlyu
Awaken the giant within: https://goo.gl/niIAEI
The Book on Rental Property Investing: https://goo.gl/qtJqFq
The voice 😔
Now that’s fuked up 🤣🤣🤣🤣🤣🤣🤣🤣😂🤣😂😂😂😂
Lease optioning is better than flipping OR renting!
“SunCor Financial MPI review"
The PASSIVE INCOME is gone during Covid19! LOL People are not paying rent and it's LEGAL not to! LOL
Flipping is a lot of hard work. Never thought of it as a "job" if time is money then renting would be it. Brrrr
Grasham, you should do videos like this more often.
Graham does it make sense that you ask for likes and subscriptions and to hit notification bells but it cost $5 to join your channel? It don't make sense to me but make a video to explain
Flipping is very risky, especially if you don't live close enough to keep track of progress. It's easy to go over-schedule & budget when you are not able to stay on top of the contractor.
Love Graham’s honesty. The main reason I keep coming back for his advice.
makes you wonder what California does with all that tax money, that they still want to raise it.
Does not look like you’re thrilled with California tax law..
I see your points on flipping, but when you find a rental property dont you look for a value add anyway? So not that different from a flip. And with the taxes, if you do a 1031 exchange you can take the profits and put them into a rental, correct?
Graham, flipping houses also leaves you debt free. How much debt do you have ?
Its fair to say that if you do not have a second job you could flip and also buy for rentals. You make your money in real estate as a realtor so that gave you the edge to get you where you at.
wouldn't you save a lot on taxes if you did a 1031 exchange, regardless of which state you're in?
Hi Graham Stephan I would like to know your input on building homes to rent out? or duplexes?
It all depends on the property. I bought a condo at a county foreclosure auction for 50k cash, comps at 90-100k. I'd hold it but HOA fees really dig into profit. I'd prefer to hold onto multifamily or SFR.
Dumb question if you flip can you use 1031 ?
The tax arguement is useless when you discover that the average rental takes a decade to make the profit that the average flip does AFTER subtracting all overhead and tax costs. But the bottom line is flipping profits blow rental profits away. The most common arguement I hear for rentals is that they're passive. I don't understand this huge fear of doing a little work. I actually love fixing up houses. I would rather make $100 actively than $20 passively.
For your way you need minimum 2M$ for investment (for minimum 3 apartments).. with flipping you can make 2M$ even with 50K$ for the starting point .
Smart people know how to make 2M$ from 50K$ and not 50K$ from 2M$
High rents over 3 to 4 years makes the same money you would in a flip after taxes.
I love the idea of building a rental income annuity indexed with inflation by increasing rents. I went from 2 to 29 units in 4 years. I am over six figures but I am reaching higher. I have a few I am remodeling now. The rental income is enough for me to live comfortably for life already no matter what the market does.
I never thought flipping was anything except another job. I have never been attracted to it either.
Appreciate the advice brotha
Why don't you try to flip hotels or multifamily homes like Ben Mallah in order to make million dollars profits at which after all deductions will leave you with profits that are worth the hustle?
You can houseflip under an S-corp and do that dividend thing, but Commiefornia will still tax you for the dividends and income– money they'll use to
better the stateslush fund into their Swiss Bank accounts.Your eyebrows are on FLEEK! ^___^ I love it! <3
So true
How about sell it using 1030 Exchange pays no tax? Use 100% or 94% (after 3% or 6% fee) is better than BRRRR only tapping 80% of LTV value is better, right? Proof me wrong. It's NOT easy to convince family to do what I want, sometimes u born with a rebel family or disdain u discourage u… u r lucky if u r born a supportive family.
You look older in 2017
So if you don’t flip what do you do ?
you are inspiring me. I think I'm going to add a duplex to my portfolio
Do you really come out on top after paying for repairs and maintenance for your rental properties?? I have heard of lease ops as a possible alternative… thoughts??