Flipping VS Renting Real Estate

Do you want a job or do you want to invest? The reason I ask is because if you are flipping houses, you basically have a job, you are not an investor. Renting houses is a real estate investment and yields passive income. Flipping houses for income is not passive at all. That being said, there is nothing wrong with flipping houses. As a matter of fact, it is a great way to get started and build up a substantial amount of capital. Then, once you have enough capital, go ahead and buy more real estate but this time for passive income by renting.

Flipping vs Renting: When to Flip

If you are thinking about flipping a house, you could get started with very little to no money. This technique is called wholesaling. This is the absolute best way to start your real estate business from scratch without money or credit. If you want to flip a house the traditional way you will need to have enough capital to invest in the property so you can make the required improvements and repairs. Flipping a house can be tricky, so you also will want to have enough experience to know what you are doing. Do your research so you’ll know what renovations will have the most impact on the value for resell. 

You will also need to know if the market in the area will support your new price point, so do you comps and consult with your real estate agent first. Buying and flipping a house when the market is at a low point still works if you buy right. Just make sure you plan and budget for the house to be on the market for longer than it would when it’s a seller’s market. 

Flipping vs Renting: When to Rent

Flipping a house gives you quick cash, but renting it out instead gives you a monthly cash flow and a larger long-term profit as the property appreciates over time and the mortgage is paid down by the tenants. You may elect to be the landlord and do all of the landlord tasks that come with it such as a manage the repairs, tenant screening, applications, leases, accounting, etc., or you could let a property management company handle it.  See this article for more details on property management companies. 

When you have the capital to get started, renting out is the preferred option for building true wealth. “Rich people do not work for money, they make money work for them,” Robert Kiyosaki 

Whether you rent out or flip your investment property will depend on whether you are interested in getting started to build your capital or if you are ready to invest and make money work for you.

Now that you know more about flipping vs renting. Which method will you start with?For more information on flipping vs renting and ways to invest in real estate keep up to date with the realestatewaypro.com newsletter.