Zillow's chief economist says short-term tactics like house flipping won't work anymore as prices continue to rise — use these 3 simple methods to build your wealth instead

Zillow's chief economist says short-term tactics like house flipping won't work anymore as prices continue to rise — use these 3 simple methods to build your wealth instead
Zillow's chief economist says short-term tactics like house flipping won't work anymore as prices continue to rise — use these 3 simple methods to build your wealth instead

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In the current U.S. housing market, Zillow Chief Economist Skylar Olsen advises investors to seek out investments in areas with long term prospects and avoid the get-rich-quick scheme that comes along with house flipping.

In an interview with Business Insider in March she warned investors not partake in strategies that depend on short hold periods, saying: "It wasn't a big deal when mortgage rates were down at 3% and home values were growing like crazy. Flipping was easy. With those two things flipped, flipping is not an easy strategy."

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Olsen attributed her case against home flipping to high mortgage rates, which can cut into profit margins on a deal especially when combined with closing costs.

And the latest news on home prices will hit any first-time homebuyers or investors particularly hard. According to Realtor.com the median home sale price in May was $442,500, rising slightly from April’s median price.

If you’re a real estate investor looking to keep some skin in the game or opting for alternatives, here’s three ways you can generate positive cash flow.

Buy, hold and build equity

The simple fact is that people can’t afford to buy houses. As mortgage rates hover above 6% and house prices remain high, affordability and demand have suppressed.

Olsen thinks real estate investors should adopt a buy-and-hold strategy to ride out the tumultuous market — and build cash flow along the way.

By holding onto your home and putting more money toward paying off your mortgage, you can build home equity — the difference between how much your home is worth and how much you owe on your mortgage.

If you don’t have the cash to purchase property, there are still ways to enter the real estate market.

If you want to take the private route to real estate investing, Fundrise, gives everyday investors access to an extensive portfolio of private real estate investments. By investing as little as $10, you gain access to Fundrise’s unique eREITs, made up of hundreds of well-located, highly-vetted residential real estate assets.

Fundrise’s eREITs are designed to seize private real estate’s consistent income generating potential.

With Arrived — an online platform where you can invest in shares of rental homes and vacation rentals — you can get into real estate without taking on the responsibilities of property management.

Start by browsing a curated selection of homes, vetted for their appreciation and income potential. Once you find a property you like, you can choose the number of shares you want to buy. With Arrived, you can start investing in real estate with just $100.

Read more: Car insurance rates have spiked in the US to a stunning $2,150/year — but you can be smarter than that. Here's how you can save yourself as much as $820 annually in minutes (it's 100% free)

Tap into essentials-based commercial real estate

A report by First National Realty Partners — a private equity firm — found that in times of market stress, you can both buy great properties at a discount and acquire higher quality properties more easily than in normal markets.

With FNRP’s platform, accredited investors have access to institutional-quality, grocery-anchored commercial real estate investments without the leg work of finding deals on their own.

Plus, since the investments are necessity-based, they tend to perform well during times of economic volatility.

Getting started is simple – just fill in some quick information about yourself, your income, and investment goals, and you can start growing your wealth.

Optimize your portfolio

If you’re looking for a way to break into real estate investing but want to grow your savings first, passive investing is a great place to start.

Exchange traded funds, or ETFs, allow you to take advantage of the top stocks on major exchanges. Wealthfront makes diversifying your portfolio with index funds and ETFs convenient by automating your investments.

When you sign up and fill out a quick questionnaire, Wealthfront will build a portfolio for you based on your finances, risk tolerance and investing goals.

As your investing needs change, Wealthfront can [automatically rebalance your portfolio accordingly.

You can also maximize your portfolio — no matter what you want to add to it — with FREC Direct Indexing. FREC is an investment platform that makes direct indexing an accessible investment strategy with their low management fees starting at 0.10%.

Direct indexing involves directly purchasing the components of an index to maximize tax loss harvesting, so you have more money to build your wealth.

Signing up takes just two minutes so you can quickly get started with optimizing your portfolio.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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