When we are just getting started into the world of real estate investing, we run across volumes of strategies and can easily be overwhelmed with our options. Without a mentor or coach, we will very likely spend time considering a strategy that is incompatible with our investment needs and goals. Most times it seems, working professionals consider flipping homes as a viable options. This article is written to explain why I believe this is not the right strategy for most people.

1️⃣ Time

Maybe this is quite obvious, but flipping a home is very time consuming. Okay, we know and understand this, but let’s really think about it for a moment. You are a high-paid working professional seeking to achieve balance between the demands of work, family and having some sort of enjoyment for yourself. You value your time.

To look for properties and motivated sellers, negotiate the purchase price, line up funding, work with contractors, manage the project, watch the market, list the property with an agent, negotiate the sell price and more….you get it… this would be way too much and not sustainable for a busy professional like yourself.

2️⃣ Lack of Scalability

Now let’s add to this. You have successfully flipped a home and hopefully the money you made was worth your time. Are you going to do it again? Let’s say you do. Your next flip would be the same process. Third, same process. Your flipping business would grow one-to-one. Unless you build a solid team that can help you scale, there will be no scalability in your flipping business and you would constantly be trading your precious time for money.

3️⃣ Taxes

Let’s say you are really successful at flipping homes and make great money from your last projects. What successful flippers likely do not tell you is that they are hating the taxes. You see, unlike other forms of real estate investing, the tax implications of flipping a home are treated like ordinary income, meaning you are taxed at a higher rate. These large taxes really eat into the money that flippers make.

Even successful flippers begin to seek better options for a less time intensive, more sustainable and tax-friendly business model. That is why I chose to invest in multifamily real estate.

Safe Investing!

RRII