There’s no better data guru in the real estate market than Nobel Laureate, author and professor Robert Shiller. Any time you’ve got a widely followed index named after you personally, you know you’ve made it. Furthermore, Shiller has an extremely deep and detailed understanding of the varied nature of risk and the boom and bust market cycle. He wrote perhaps the seminal work on the Internet bubble, “Irrational Exuberance,” which he published in 2000, just as the market collapsed.
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Read more about Flipping Houses and the Real Estate Market
If you’re fairly new to being an independent real estate flipper, or new to being self-employed or an owner-operator of a corporation in general, it’s time to reassess the way you’ve become accustomed to looking at taxes. Here’s why: Flippers, by definition, are entrepreneurs. Instead of buying and selling widgets, though, you’re in the business of selling inventory. The IRS taxes you like a retail store owner, after all.
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Read more about Tax Planning Tips for Flippers
While mortgage interest rates are on the rise again, putting steady pressure on the affordability of homes, there is a significant silver lining from the property buyer’s perspective: Rents have reached an all-time high as well. This is crucial from a real estate perspective, because high rents, more than any other indicator, place a sturdy floor under real estate investments.
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Read more about Capitalization Rate
Things are getting a little tougher out there for flippers. Interest rates on debt are picking up – and that’s going to spill over from the individual 30-year mortgage market to the hard money market. Meanwhile, institutional buyers have been backing up the truck in some areas, buying up loads of distressed properties that flippers have traditionally counted on as their bread-and-butter projects.
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Read more about Financial Ratios for Real Estate Flippers
Long-time readers of the Flippin’ Insider may recall the column in which I discussed the tax ramifications of flipping houses. Here’s the gist of it: The IRS considers houses to be no different than hubcaps: If you are in the business of buying inventory wholesale and selling it at retail, then a house is no more a capital asset, deserving of favorable long-term capital gains rates, than a hubcap. Instead, the IRS classifies
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Read more about Avoiding the ‘Dealer’ Tax Trap
Flipping real estate is all about deal flow. Flippers don’t get to rest on their laurels and collect rent checks. You have got to get to the point where you are not only working on at least one profitable deal all the time, but where you actually have to choose from among several profitable properties to work on, because you simply cannot take them all on at the same time without additional staffing.
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Read more about Building a Deal Pipeline
It looks like the long process of rolling back the government’s role in the mortgage market has begun. The Federal Housing Finance Authority – the regulatory agency that oversees both Fannie Mae and Freddie Mac, has indicated that it is seriously considering rolling back the maximum loan amounts it will allow the two mortgage giants to guarantee. Currently, the maximum loan amount that qualifies for the federal guarantee – a so-called “conforming loan” because it
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Read more about Flipping Expensive Homes
From the very beginning of the Flippin’ Insider column, we’ve been all about having a sober understanding of the numbers – especially the all-important concept of ROI, or “return on investment.” You aren’t Citizen Kane running a newspaper and happy to lose a million dollars a year. You need to make money. Which means every investment you make in a home – whether a structural renovation or a simple coat of paint – has a positive ROI.
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Read more about Flipping Houses and Return on Investment
When most people think of flipping real estate, they imagine the classic “buy-fix-market-sell” business model, in which the flipper keeps ownership of the house from the word “go” until he’s handing a young couple the keys, and they live happily ever after in their dream home with the shale shower and the granite countertops. Well, that’s one way to do it. But there’s another model as well.
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Read more about Contract Assignment
If you’re going to be a professional flipper, you are going to need some professional accounting. This is not something that you can just hire someone to do for you full time, though. There are a lot of expenses that you will have to keep track of. Nobody can do this for you. Tracking your expenses, however, is critical in this business. Indeed, after you subtract taxes paid (or not paid, if you were good at tracking your expenses!), your ability to convert expenses into deductions could
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Read more about Setting Up Accounting Systems