Market News Update: Go Flip A Beach Hous...

Editor’s Note: Dennis Fassett is a former corporate finance executive turned real estate investing "Cash Flow Mercenary". Dennis specializes in single-family and multi-family cash flow properties, and thoroughly enjoys assisting his fellow investors with their own strategies, including how to buy your first apartment building.

As an ongoing contributor to Mogul’s “Market News Updates,” Mr. Fassett provides us with his own unique, lively, and thought-provoking commentary on the timely industry news and events of today that are impacting our industry. And be sure to check out his other super-helpful Market News Updates. For now, enjoy...

From Dennis Fassett, Cash Flow Mercenary...

Even though we’re real estate investors, we ought to be paying attention to other markets.

Because what happens in other markets impacts real estate.

I knew a couple of house flippers who laughed at me when I told them that in 2006. One’s now working at Walmart and the other’s at an auto parts store. But looking at the bright side, both of their massive bankruptcies are set to drop off their credit reports this year.

But I digress.

My point is simple. We need to be keeping our eyes open to what’s happening in other markets.

So let me ask you - have you been paying attention to the stock market? Well if you have, then you know that the S&P 500 index reached an all-time high on April 1st…

It was up 179% from its 12-year low in March 2009. You read that right. 179 PERCENT. That’s a hell of a move.

And do you know what that means?

It means that a whole lot of money has made its way into the pockets of rich people. And that a whole bunch of rich people now have a ton of extra money lying around and they’re itching to spend it on luxury stuff…

Like fancy cars.

Like fancy boats.

And…vacation homes.

Mr. Richie Rich von Wealthy Buys Another Vacation Home

But don’t take it from me. Take it from Lawrence Yun, the chief economist at the National Association of Realtors (NAR). He said the same thing, but because he’s with the NAR, he had to overcomplicate it. I think it’s a rule they have or something…

Here’s what he said:

“Growth in the equity markets has greatly benefited high-net-worth households, thereby providing the wherewithal and confidence to purchase recreational property.”

Yeah. Just like I said. Rich people are buying vacation homes. It’s crazy. Did you know that vacation homes accounted for 13% of all sales last year, the highest level since 2006?

And that 38% of vacation-home buyers paid with cash in 2013?

I didn’t know any of this until I looked it up. The vacation home market is hotter than the residential market right now. Vacation home sales increased 30% year over year in 2013.

2014-05-07-Stockmarket2.jpg.jpg Doesn’t that sound like an opportunity? It does to me. So what do I always suggest when some new opportunity arises? That’s right. Find a way to profit from the situation.

The thing is, while I’ve flipped single family houses and apartment buildings, I’ve never flipped a vacation house before.

So I did some research. And out of more than 17 million results on google for “flip vacation property,” I couldn’t find any information at all on how to flip them.

Guess what that means?

That there’s probably not a lot of people doing it.

And when exactly was the last time you heard of a real estate investing strategy that hardly anyone was using? Like a buddy of mine says - the next time will be the first time.

Well this IS the next time.

So go flip a beach house already!