All Forum Posts by: Michael Plante

I have fallen on a really good deal on a 3 family .  If I keep it, I could generate 1800-2000 a month by renting however if I rehab and flip it, I could make around 175k. What should I do? I keep going back and forth on what is the best option.  Dealing with 3 sets of tenants sounds like a pain but I know I could make more money in long run.  If I flip , I would just continue to put it into other properties to make money.  This will be my 4th flip if so. 

 Absolutely!  To take your comparison a step further - if you have $1,000,000 in a 401k and you retire, you will be advised to take 4% our annually.  So you will have $40,000 of income from that account and you will be taxes on it so you will have $30,000 or so annually going into your pocket.  If you take that same $1,000,000 and invest it in real estate you would probably get 8% return so you will have $80,000 of income and will likely not pay tax on it at all.  Which would you prefer?!

Even if you took the $1,000,000 out of your 401k and paid the tax on it and you are left with $700,000 and get the 8% you are still left with $56,000 in income and probably no tax.  

You are right - a financial advisor would say it's too risky to be in that much real estate.  But what happens when there is an economic downturn? Your money in the market goes down 25% so you are now pulling 4% off of $750,000.  Not good.  But the real estate cash flow will not crater nearly as fast - asset values might go down the same 25% but your cash flow will not because rents don't and can't go down as quickly.

It's always good to have a mix of different assets, but I don't see how real estate is riskier than owning paper assets that don't produce any income!

@Matthew Irish-Jones do you have any idea how to sell a property that now has the city on its radAR as the investors in my area has stated that it is tagged so they will be bearing down on them and they dont want the attention.