The choice you make about the layout of your track will depend not only on the available space but on the work you want your railroad to do. At first it will be enough just to have the locomotive pull cars around, pass onto a siding, switch onto a branch line. You have a toy train with a wide choice of powerful locomotives, dozens of accurate, scale-modeled cars, and so many interesting accessories and buildings that you can keep your budget unbalanced for months. Isn't that enough, you ask?
Of course it is enough to give you countless hours of pleasure. But you can increase that pleasure and extend it for years by developing your model railroad so that it has a special character, a personality of its own - a personality that is a reflection of you. A model railroad is a toy, yes, but it is much more than that, as dozens of bankers, lawyers, engineers, doctors, truck drivers, bookkeepers, salesmen, and just plain people, young and old, will testify.
You and a few hundred thousand other model railroaders have made the manufacturers of trains fit their products to your plans in demanding realism from them - track that looks like real railroad track, cars and locomotives scaled so they look like real cars and locomotives. You enjoy these things and smoke and the choo-choo sounds because they reproduce the real thing. Your pleasure will be increased if you make your layout and your handling of trains reproduce, as closely as possible, the real thing. You can do this if you have a plan.
Your plan need not be rigid and inflexible. It should be made to increase the joy of railroading, not to hamper or reduce it. A plan can save you time, work, and money.
One of the first buildings for your pike will be a station. If you are handy with tools, you may want to make your own, but if not you will buy one of the beautiful stations put out by the manufacturer of your train. You will find in your hobby store stations large and small, old-fashioned and modern. Which one will you purchase?
Knowing the character of your railroad, having a plan for its development, will help you decide what accessories you need. If your pike is going to be laid in farming country, for instance, you will not want a large city terminal, but a smaller way station.
No matter how fascinating you find the talking station that announces the destination of your train and calls, 'All aboard' you will know that it does not really fit if you have only a freight train. Instead, you will want a freight station, and if you like movement you can get one with a loading device that lifts heavy crates onto your flatcars and gondola cars.
With all of your accessories, buildings, and scenery, the same question will present itself - what fits your particular railroad as you create it? You may plan to have your system carry out all kinds of operations eventually, with both passenger and freight trains, the latter carrying many different kinds of material. This follows the practice of most real railroads and is all right, provided you have space for enough track with appropriate buildings and terrain.
However, there should be some dominant aspect of your railroad's work. This is true of most real railroads, even when they carry on many different kinds of work. The Erie, for instance, is known primarily as a freight road, the Chesapeake and Ohio as a coal-carrying road, the Long Island as a commuters' line.
There are systems whose biggest volume of business comes from carrying cattle, others factory goods, still others wood pulp or perishable foods or oil. These primary functions give a certain character to the different railroads, no matter how many other things they also do.
By considering the functions of your particular railroad you can build a railroad that looks as real as you can possible make it.
Flipping is the most basic of real estate strategies. It involves simply buying a property, fixing it up, waiting for a short time, and then re-selling it for a fast profit. This is called "rehabbing." A variation is to "wholesale" the property. In other words, you buy only the contract and then immediately sell it to another investor without getting involved in any rehabbing.
At its heart, flipping is a speculative strategy. Investors bet that the market value of a property will rise to the point at which they can make a quick profit before they close on the deal.
There's the potential for big profits, but there's also the potential for big losses. Let's look at the pros and cons in turn so you have both sides of the picture.
The Pros of Flipping
The first—and main--advantage is investing a very small amount of money for great gains. Here's a rehabbing example to illustrate this point:
Let's assume you put down $12,500 (5%) on a $250,000 house.
Then, you spend $5,000 and 60 days fixing it up and another $3,500 in payments.
So, your cash investment equals $21,000.
If you then sell the house for an $80,000 profit, the return on your investment is a great one. For that investment and two months' worth of time and money, you've made $59,000.
A second advantage of this approach is that you can do flipping full-time or part time. The part-time option can be a good way to work your way into real estate investment because you learn the rules as you go.
As I mentioned earlier, flipping is the most basic of all real estate strategies, and that means it's the easiest to learn. This leads to the third advantage: You don't have to be a real estate "genius" to get started in the field. Flipping is the simplest strategy to master.
The Cons of Flipping
To be blunt, the risks of flipping can be considerable. First, if you don't stay on top of things, the cost of renovations, mortgages and time can exceed your profit margin. You can lose money instead of making it!
Second, there's the possibility that too many speculators can get into the market. If that happens, prices can drop very quickly, and there goes your profit!
Third, if you fail to do proper due diligence, it can cost you a lot of money. Hidden property problems can turn what appeared to be a good deal into a nightmare. Bad plumbing, faulty wiring, roof problems, termite damage, etc.—they're all expensive to take care of.
Fourth, if you don't flip a property fast enough, a tax audit may result By that, I mean that if the money made off the flip doesn't immediately roll into a similar investment (another house flip), then the profit may be subject to a capital gains tax.
Finally, in some cases, you may have to pay a realtor's commission.
Types of Flippers
There are three basic types of flippers.
Scouts or "bird dogs"
This is often a route novice investors take to get into the real estate business. As the name indicates, the bird dog's job is to scout out potential deals and then sell information on those deals to investors. Investors pay scouts a fee for each deal that's closed. These fees can range from $250 to $1,000 or more, depending on the property price and its potential. The downside of being a scout is that you make the least amount of money in comparison to dealers and retailers.
Dealers
These investors are also called "wholesalers." Their strategy is to find bargain properties, get control of the contract, and then do one of two things. They can close on the property and sell it outright. Or, they can simply sell the contract to another investor. For dealers, there's great profit potential, no hassle with tenants, and no improvement costs.
Retailers
Another name for these investors is "rehabbers." They buy a property at a wholesale price, improve it, and then sell it for full retail price to buyers. This option has the greatest profit potential, but also the big risks I mentioned earlier.
Guidelines for Successful Flipping
Guideline 1: Know your market!
There are several simple but effective methods you can use to learn your market. One is to drive the neighborhoods you're interested in to find out what types of homes are selling well. Nothing beats seeing properties with your own eyes to get a true sense of value. Also, you can work with a realtor, if necessary, to find out the comparable worth of your targeted properties. But, be sure to dig deeper to find out everything you can about a market--property taxes, crime rates, quality of the school systems, etc. Knowledge is definitely power in the real estate business; the more you know, the better prepared you'll be to spot good flipping deals because your radar will be well-tuned.
Guideline 2: Plan—don't enter the market haphazardly.
Diving into the flipping market without a plan is like trying to swim the ocean without a life jacket; it's a recipe for drowning financially. A better idea is to learn the basics and study the market carefully before dipping your toe in the water. In other words, prepare yourself for success. Once you enter the market, evaluate each property carefully and objectively to see how much work it needs in order to make it a great value for you and for any potential buyer.
Guideline 3: Form an informal team.
It's a fact of life--you can't be everywhere at once, and you can't know everything. That's why you need an informal team to support your investment efforts. They can supply the knowledge and experience you lack. Think of it as cloning yourself in order to achieve maximum profits. So, build yourself an informal support team of realtors, property inspectors, contractors, tax accountants, attorneys, etc. And be sure to choose the best possible people for your team. You want advice from experienced and reliable people, not amateurs or incompetents.
Guideline 4: Prepare for problems to pop up!
It's an ironclad guarantee that, sooner or later, you'll encounter problems when dealing with the flipping of properties. You can't always prevent these problems, but you can prepare to handle them in the best way possible. That means setting up a financial reserve. So, be sure to save up enough money to absorb the expense of unexpected problems.
Guideline 5: Think long term!
There may come a time when you get hold of a property and then find you can't flip it right away. If that's the case, keep in mind the basic rule that real estate investments perform well over time. So, if you can't sell the property immediately, the options are to live in it yourself or rent it out to others.
The Process of Flipping
The process of flipping can vary from region to region within the country, but here's a general description of the method so you can familiarize yourself with it:
Step 1: Determine the markets you're interested in.
Step 2: Establish a clear goal. Know what type of flipper you want to be—a scout, a dealer, or a retailer.
Step 3: Put your informal team together.
Step 4: Identify investors and then seek out the properties they want to buy.
Step 5: Do your research by: Reading newspaper ads Attending real estate investment club meetings Attending foreclosure auctions, tax sales, trustee sales, etc. Touring neighborhoods. Looking within a 10 to 20 mile radius of your home. Seeking out vacant houses, houses in need of fixing up, and houses with at least 50% equity. Contacting owners, talking with neighbors. Checking sources (county court house, tax offices, etc.) for code violations, divorces, probate, evictions, bankruptcy, criminal acts, out-of-state owners and liens or judgments for possible leads. Keeping track of all opportunities through voice mail services, computer tracking software, etc. Networking with other investors. Understanding all agreements and contracts down to the last detail!
Key Point: Gather as much information and knowledge as you can before you entering into flipping deals; it's a simple market, but not one for the uninformed!
Both Jimmy Cox & Jack Sternberg are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Jimmy Cox has sinced written about articles on various topics from Web Development, Horse Racing and Investments. For People Who Have Always Wanted The Perfect Model Railroad Layout But Don't Know How To Start!Click here for FREE online Ebook