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Investment Strategies in Today’s Real Estate Market

last modified April 8, 2009, by Peter

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BUY AND HOLD OR FIX N’ FLIP?

In the past couple of years we’ve seen tremendous opportunities here in the Denver Colorado foreclosure market. Investors are buying Denver REO Homes at incredible prices each week. Investors are buying properties to fix and flip and many investors are buying REO properties to hold for long term rentals. There are certainly advantages and disadvantes to both strategies. And while neither strategy is right or wrong, it’s important to figure out what the best strategy is for you.

What is the best investment strategy in today’s Real Estate market? Each market is unique of course but here in the Denver, Colorado area I believe we are seeing opportunities for both. Consider these two examples of deals that we have put together in the past couple of months:

Fix n’ Flip:

Type: Single Family Home
Property Description: Ranch/with Basement, 3bd, 2 ba, 1 car garage, 2200 sq/ft total
Purchase Price: $90,000.00
Fix-Up Cost: $9,500.00
Sale Price: $136,000.00
Estimated Pre Tax Net to Seller: $26,000.00
Total time on market: 6 weeks.

Buy n’ Hold:
Type: Single Family Home
Property Description: Ranch/One Level, 3bd, 2 ba, 1 car garage, 1100 sq ft,
Purchase Price: $78,250.00
Fix up Cost: $4500.00
PITI after 20% down payment: $545.00
Rental Amount: $1100.00
Gross Monthly Cash Flow: $555.00

Both strategies have the potential to be successful as you can see. My personal inclination is to lean toward the buy and hold approach due to the fact that it is still very much a buyer’s market so trying to sell can leave you feeling quite vulnerable. If a client does want/need to do a flip I prefer for them to stay close to the bottom of the market, ie: have less than $150K into the project all said and done. This is because at this price the investor can always hold the property as a rental property if necessary.

For a free 1 hour consultation on the best strategy for you, feel free to contact me and I would be happy to discuss the advantages and disadvantages of both strategies with you.

Written by: Peter Musser

You may contact Peter at 303-502-0086 or by email at Peter@jdunnreatly.com. Please visit us online at www.CashFlowProperties.com or www.DenverPropertyManagement.com.

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This entry was posted by Peter, on Tuesday, March 10th, 2009 at 10:06 pm and is filed under Buy & Sell Homes, Real Estate News, Denver Real Estate, Colorado Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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