A discussion of capital gains and passive income may sound as exciting as drying paint, but this is one of the most important areas of real estate investing to understand. It’s so important I’m devoting these next two blog posts to it. I’ll do what I can to make it clear, and even interesting! A quick start-at-the-beginning to be sure no one is left behind – skip this section if you already know these definitions: Capital gains are the profits on the sale of an investment such as real estate, including property flips. The profit is the price at which Read more…

I want to give you a quick-and-dirty snapshot of some of the important tax considerations of rental properties, if you are not already somewhat versed in rental income. Be aware that this is just a brief introduction, far short of a comprehensive study of passive income taxation!   In my recent blog posts about your strategies for flipping vs. renting (Strategic Decisions: Capital Gains vs Passive Income and Strategic Decisions: A Dual Approach) I mentioned that rental income is taxed as passive income, and receives better tax treatment than either earned income (salaries and wages) or capital gains (profits on Read more…

This blog post title might sound like a discussion an older responsible relative wants to have with you about what a gamble house flipping is – a relative that knows nothing about flipping! Professional flipping is NOT gambling – if it seems so to you, either you have more to learn, or else flipping is not the right investment strategy for you. My definition of “amateur flipping” – aka “gambling”, as I see it – is buying a property in a rising local market in hopes the property will go up in price to sell for a profit, regardless of Read more…

House flipping is a tradition recorded at least as far back as the 1920’s, and doubtless in action long before that. An early example of flippers assisting substantial upgrades in the character of a community, lifting lifestyles and property values, occurred throughout the 1920’s in California (and has been a repeating cycle there ever since). As the sunshine coast and the movie industry began taking off economically, investors bought, renovated and improved aging and dated properties. Nicer housing attracted even more business and upscale retail activity, in turn attracting even more wealth … and now the California coastline is a Read more…

Property flipping can be exciting and very profitable – but it is also easy for newbies to make strategic mistakes that undermine the profits they had anticipated so eagerly. How can you avoid the most obvious blunders? 1)      Overdoing The Project = Over-Spending on Market Non-Essentials You don’t need to replace and upgrade the kitchen cabinets if painting them is all that is needed to satisfy this particular market. You may not be able to live with some of the cosmetic flaws you see in the house and lawn – but your buyer may prefer to ignore them and save Read more…

You’ve worked like a dog on this project; you’ve creatively made it nicer than anything else in the neighborhood; for heaven’s sake the buyer-to-be OWES you for all the money, sweat, work and worry you’ve put into their new home! Right?   Wrong!That is not how people buy houses.   People are willing to pay only what a house is worth to them, in their own circumstances. A home shopper may love the new beadboard wainscoting and the new sound system, but your market may be filled with buyers who would rather pay less and do without these niceties.   Read more…