BP for 2015 flips or passive cash?

[Account Closed]

I want all you guys opinion. Are you going after more flips abundant short term cash or a steady passive income?

What are your 2015 goals?

Love gaining knowledge from you all.

[Kira Golden]

I think the trend for 2015 will be all about sub market specialization. What I mean by that is that the general US population used to move as one. i.e. market went up market went down by asset class across the US as a whole. Since 2005 this has not been the case. Increasing market volatility and asset class specialization is driven by three things: 1) Consumer demand, and 2)Banker options, 3) Regulatory climate.  

To the first point, areas such as downtown Denver, Houston, have lots of tourism demand, but an area like Dayton Ohio is better served by value add rehab. 

To the second point, wherever the banks "feel" the demand is is where they are more apt to lend. Low cost lending drives investor behavior. If you can get a 0 down 3.5% 30 year fixed to buy a rental that is much more attractive than 20%  down 15% interest fix and flip loan. So as banking loosens up investors will be driven to invest in product that the bank favors. 

to the last point, the regulatory climate has a large impact on investment strategy. For example, I won homes in Sedona, AZ. While this would be a GREAT market for Vacation rentals  the city has strong policies (and consequences) against short term rentals. On the other hand I have units in Puerto Rico where the government gives tax invectives fro condo  vacation rental in the way of only taxing 10% of my total income form the units.  These factors impact the overall strategy. 

To have success in 2015 I suggest starting by CLEARLY defining your goals and then evaluating the specific sub markets you are looking to invest in and drill down to a strategy that makes the highest and best use of that market. 

Lastly, no matter what strategy you use make sure you diversify. your portfolio should have various asset classes as well as geographical exposures, and EVERY deal you do needs to have three exit strategies or DONT DO IT. What I mean by this is your vacation rentals should also cash flow if they had to be long term rentals, and they should be purchased for a price that could be flipped for 5-10% under market if you needed to exit.