Buy & Flip Strategy

Buy & Hold Strategy

• Must make money on the buy. Buy property for at least $30,000 under market,
• Cash intensive for the buy & repairs,
• Requires tight project management. Full time job,
• Bank on market conditions not changing in near term.

• Can pay market price and strategy still works,
• Mitigate short term market conditions,
• Sell when conditions are best,
• Not as cash intensive on the front end,
• Take long term advantage of current low interest rates.

Time is your enemy

Time is your friend

• High tax consequences,
• Easy to lose money,
• Does not take advantage of current
  low interest rates.

• Can invest in real estate without it being
  a full time job!

6 ways to make money in Real Estate

1031 Exchange, named after the IRS code, allows you to sell investment real estate and replace it with other investment real estate without creating a taxable event.

Many investors don't realize that taxation on the sale of investment property does not have the same tax advantages enjoyed when selling their principal residence. Profits are often substantially affected by tax consequences. With a 1031 Exchange, you can defer payment of the tax normally due on the sale of your property that has a taxable gain.

There are many benefits to performing an exchange instead of a sale and new purchase. It can make more funds available for the new purchase by deferring any tax payments that would have been due. It can also help you with your investment income. By allowing you to sell investment properties that aren't giving enough return and use the non-taxed gain to purchase another property that produces more cash flow, you can greatly increase your income.

To qualify for a 1031 Exchange, you must trade real estate that is held for business or investment purposes for other like investment property. 1031 Exchanges can not be used in the sale of your primary residence or second home.

To qualify, you must use a Qualified Intermediary, who in turn buys the next property you have chosen. You are not required to exchange all of your cash from the sale of the first property into the purchase of the second. However, if you take proceeds from the first sale, each dollar taken is subject to capital gains tax. To avoid the tax, you must rollover the entire gain into the new property. You may also exchange one property for several others or vice versa. It does not have to be one for one.

For a copy of the 1031 Exchange Rules and Guidelines, give us a call at 480.314.1414 or
email us at Bill.Spain@providentaz.com.
We recommend that you consult your personal accountant for specific advice.

• Arizona is consistently rated among the top states in the nation in terms of population growth and economic climate.  According to the Arizona Department of Commerce, Arizona currently enjoys a vibrant economy fueled by low interest rates, increased buyer power of baby boomers, low unemployment, high job growth and a strong demand for new housing.
   
• Over the next decade, it is predicted that 40% of the total growth for the Phoenix AZ area - about 128,000 new homes! - will be built in areas west of Phoenix.
   
• Named the best run city in the country by Governing Magazine, Phoenix AZ is also one of the fastest growing cities in the country over the last decade.
   
• With a diversified economy, an educated workforce, and one of the lowest unemployment rates in the nation, Phoenix is a magnet for corporations and workers.

Click the image above for a zoomable street map of the Phoenix Metro Area
 

Click the image above for a  zoomable street/ zip code map of the Phoenix Metro Area

Other reasons to invest in income property are:

• Tax deductions & credits
• Appreciation – increase in value
• Leverage – using other people’s money
• A steady, growing income source
• Amortization – loan reduction & payoff
• Risk level – your assets are secured
• Possible capital gains exclusion through 1031 exchange
• Diversification-The real estate market doesn't always move in tandem with the securities markets, so investing in real estate can provide diversification. In fact, when the financial markets are turbulent, real estate is often viewed as a "safe haven" for investors.

Click here for extensive Arizona Economic Information Resources