Do Flipped Homes Dramatically Change the Housing Market?

Posted on Apr 25 2018 - 5:47pm by Lance Edwards
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By Cherie Constance  —  When it comes to investing in distressed homes, I’ve heard it all.

You probably have, too, especially if you’ve been in the industry long enough and have explained what you do to enough of your friends and family.

Most recently, I had the opportunity to tackle a concern from an upset buyer who claimed that the rise in renovated houses was ruining the housing market. Coming to Spokane, Washington from a larger market where home prices had risen steadily over recent years, he noticed a correlation between the higher number of area investors and associated the two. According to him, flipped properties forced surrounding housing prices up so high that he could no longer afford to live in his desired neighborhood.

But does his concern hold water?

Do increased home values affect the economy?

Or is this a chicken vs. egg argument?

The economy is cyclical, with natural periods of expansion and recession. As such, one can assume the housing market is, too, and that anything that drives up the housing market—such as increasing home values—affects the economy. But does it?

In this business, we work off percentages and margins. In a volatile economy, those margins shrink, and when the economy is good, we have more opportunity to profit.

If the economy is doing well and unemployment is low, the demand for housing increases, and in turn, so does the cost of housing. Conversely, when the economy drops, and budgets tighten, the money allocated by the average American family for general upkeep on a property is shortened to cover the basics, like the mortgage, and housing values decline. Stretch this out long enough and extreme enough, and neighborhoods’ values reflect the dropping home values.

It is fair to say that the economy influences the housing market more than the housing market influences the economy.

Regardless of how simplified we’ve made the economic cycle here or how many details we’ve left out, the real issue is why anyone would believe flipped houses in any neighborhood would affect their buying power. It sounds to me like we’re dealing with a potential homeowner who would rather avoid bringing value and motivation to his market rather than live among distressed homes.

Instead, flipping breathes new life into communities by giving qualified buyers a chance to live in their dream home and adds value to the hardworking homeowners in the area who don’t want to live among run-down properties.

For investors, Cogo Capital offers quick turnarounds, excellent terms, and millions to lend. Cogo Capital serves both local and national real estate investors, real estate agents, and private money lenders in quality, multiple loans. If you’re ready to make a difference and need the cash to do so, then tell us about your deal and let’s get it funded! Submit your deal for funding:  www.cogocapital.com/lance

 

About Lee Arnold

Regardless of where you are in your investing career right now, I can guarantee you that I’ve been there.

It all began with two life-altering moments in my life that set me on the millionaire trajectory. Both happened when I was in my early 20s. Like most self-made millionaires, I began at the bottom of the financial food-chain. My humble beginnings started as a bag boy at a local grocery chain in Spokane, Washington working for $3.90 per hour. 

My first “aha moment” happened while I was aspiring to a management role at the store and was reading the life-changing book, “Rich Dad, Poor Dad” by Robert Kiyosaki. Suddenly my management aspirations looked very small, but my future possibilities became extremely big.My second “aha moment” happened while I was sitting in a philosophy 101 course in college. My attention span was divided between the slow ticking of the clock and my professor’s long winded discussion on the economy. While the minutes ticked by, he let it slip that he was making only $45k a year. That information and the knowledge I gained from Kiyosaki’s book, made me realize I was on the wrong path to success and needed to make some very important changes fast. From those experiences and an influential nudge from an incredibly persuasive late-night infomercial, I went into real estate.I began the way many people do—in the educational and training space. Like many, I went to real estate seminar after seminar and bought course after course.

Through long years of trial and error, I built up a very profitable, million-dollar real estate business from the ground up. I’m proof-positive that the training system can and does work!Because of this, I created The Lee Arnold System of Real Estate Investing to teach clients how to translate workbook education and real estate theory into the real world of real estate investment success.However, after years of teaching and mentoring around the nation, I found that education doesn’t mean a lick, if the person being taught doesn’t have the capital to put their knowledge into genuine action. I already had access to capital, but my students didn’t.So, I took the challenge and created Cogo Capital®, where real estate investors could go for unlimited funds for their non-owner occupied investments. Since then, I have been involved in over 1 Billion Dollars-worth of real estate deals with clients. While the progression seemed natural, we were missing one, very large and essential piece of the pie. The marketplace was teeming with people who had the funds, who aspired to make higher returns on their invested dollar, but lacked the desire to get involved in real estate at the ground level.In light of this opportunity came Secured Investment Corp, which gave people the training they needed to safely lend on first trust liens (real estate), and make higher returns than they were currently seeing in their stock market, bank CDs, or bond investments. As we combined all these facets—training, funding, and the education to lend on real property—we began to notice a progressing trend of growth and success with the clients involved.  Through this model, what we call “The Circle of Wealth,” we noticed that people who entered in at the training level and borrowed funds for their real estate investments, eventually became lenders in their own right. They then helped others obtain the capital needed to grow their real estate portfolios. This allowed everyone, on every side, to succeed.It is our goal that everyone can enjoy some level of success in The Circle of Wealth, and inevitably lap it several times over.It’s time to join the Circle of Wealth today!