How do fix and flippers grow wealth?

[Bill Goodland]

Now before and the buy and hold people come in and tell me how that is the only way to gain true wealth, semi-passive income, and reap all the tax benefits, thank you but I know that already. Now, for the fix and flippers, I am curious what you do with your flips profits once you have successfully scaled your business?

I have heard many flippers on the podcasts saying that they eventually start holding some of their flips, but what if your market's rent to value ratios don't make sense for buy and hold? It seems to me that the quickest way to scale a business and make the best return on your capital(once you are educated and have a large nest egg to invest) is to begin flipping or BRRRRing properties if renting making sense. My question is for people in say the southern California area that flip, do you buy out of state turnkey to grow your passive income streams, invest in syndication deals, look for boots on the ground to buy rentals out of state, index funds, or just plan to fix and flip until you can't anymore?

[David Thompson]

Bill,

Syndication is a strong consideration.  Flipping is a business, use the profits from that and invest passively in syndications placing your money with experts running the show and take advantage of the tax laws.  @Bret Ehlers mentions investing in debt and that is a way, but I don't like that in taxable accounts as it has no tax advantages. If you have a SD-IRA or Roth 401K, put lending programs in these vehicles. For your taxable accounts you have a wide variety of solid choices that are trending well now and look solid for the future based on demographics. The real estate laws are such that deprecation, mortgage interest and property tax deductions shelter a lot of your income. Returns from these types of investments are in the target of 8-10% preferred returns annually and can achieve up to 15 - 20% IRR over the holding period. These programs in a taxable account typically will outperform lending programs after tax. I currently prefer large value add MF apartments, mobile home parks and self storage. There's a lot of ways to play here but usually the key to entry is accredited status for many of these deals. Some background on why I like these niches.

https://www.biggerpockets.com/blogs/9145/63405-syn...

https://www.biggerpockets.com/blogs/9145/53820-why...

https://www.biggerpockets.com/blogs/9145/54155-sel...

https://www.biggerpockets.com/blogs/9145/62927-6-r...