Fast Tracking Your Financial Freedom With The Buy and Sell Strategy
Benefiting from buying low and selling high with real estate
Let’s say you have decided to go down this path and you are looking for a property to buy and then sell, to make some profit from so that you can stop ‘ work’.
A mistake that some people make when pursuing this choice is that they tend to work on monthly incomes (and bill paying), so they then set their profit margin too low.
Some people will set their goal at profiting about $5,000 from the first sale which is way too low if you are wanting to gain financial freedom. For example, if a person earns $55,000 a year and wants to replace their income with a buy and sell strategy they need to be looking at making approximately $45,000 profit on the first deal.
Why, you may ask?
If you are going to be using the ‘buy and sell’ strategy to replace income you need to have a substantial number of months of income aside so that you can continue to find the right property to purchase each time. If you need a monthly income of $4,580 you need to profit in the vicinity of $45,000.
By getting say $10,000 profit, you have only left yourself about 2 clear months before you have to replace your income again, but if you got $45,000 profit you have left yourself a 10 month leeway to buy and sell again.
If you can make even more than $45,000 profit then all the better. Once you have done this several times and have accumulated $150,000 in profit you then have 3 years income ahead and you can consider yourself well on the way to having financial freedom.
Therefore a strong part of your strategy is that your deals need to be making good profit. If you are buying and selling part-time as you still work you are probably only going to manage 2 or 3 deals a years so to achieve your financial freedom you need to choose carefully and aim to make substantial income from the sale. This will enable you to move out of your job.
Another point to factor in then, is the amount of risk you are prepared to take.
So you need to ask yourself if you are prepared to make the sacrifice for a few years to have financial freedom in the end.
Filed Under: Investment Strategies • Quantity Surveyor
About the Author: 
i would love to have Financial Freedom by owning a real estate related business. my dream business is to own several units of apartment for rental.
we can have Financial Freedom as long as we work very hard and become focused on making money. nowadays we can also make money online and it is a good deal to earn money.
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lady Jhen,
I buy properties, reno and sell. I want to use this flip strategy to be my full time source of income.
I have made 55,000 of my first prop.
45,000 off my second
my question to you is, how do i aquire finance with out a job or income(cash flow) to sustain doing this full time???
Hi
I would not sell and use the equity towards the deposit for the next property.
The bigger the deposit the easier it is to acquire finance.
The other thing would be to have a great Broker who can help find finance for you.
Hope this helps
Tracey
Ruvin,
This is a reasonable strategy for acquiring wealth long term. In the short term though the prospects of sustained growth when you have expenses to pay will be a slow process if all you’re making is 55k or 45k per property.
Lets put things in perspective. If the property market is down, interest rates go up and you see alot of foreclosures happening best thing to do is go in with a group of people who have a good capital base and buy up a few properties together that can be renovated. One thing to consider in Australia is the option of using offset accounts to negate the interest component of a possible mortgage. The offset account is dollar for dollar… Now as a single entity investor you can only do so much. With a group of people though you can rely on the notion that when the chips are down i.e. foreclosures left right and centre you can only look up and play for time. With time and the right renovation strategy you could see a much bigger profit margin. Plus you can lease out the property and use the money towards whatever your mortgage happens to be.
No interest to pay, play for time for captial gains, and buying the right property with the right renovation strategy is the key.
Good luck.