Which is preferable: property flipping or real estate property investing?
To reach an answer, it may help to identify each term and put each one in perspective.
Home flipping is the strategy of acquiring a residence then reselling it at a profit in the smallest period possible. A house flipping pro aims to make the biggest amount of cash really fat by flipping the house, therefore the term is called house flipping.The house flipper does not hold on and rent the house. As a matter of fact, the shorter they hold the house, the better it is.
A real estate investor holds the home for rental income then either keeping the house for a while and selling or keeping it for rental income.
The real estate investor might buy the property with the purpose of selling it at some time, but they hold the property for appreciation or for rental income.
Which form of investing is the best for you and your family?
The big difference is house flipping pros get their money back fast with a quick sale while investors want to make money in the long term
House flippers target houses that they can buy at a cheaper rate than the normal market rate. In doing so, it guarantees a quick profit from a quick sale.
Usually, the house will be sold at a cost a lot less compared to its market price (within the cover anything from 40-80% lower than the market will bear).
Buying and renovating a home is the easiest way to house flip. The house flip pro purchase the house, quickly renovates it and then sells it under a month or so.
Renovating is much cheaper as one can precisely estimate the cost of materials and labor required to do it. It is usually easy to get specialists who grasp the exact renovations required and the house will look really good for a quick resale when it’s done.
This enables the house flipper to get a quick market for the house and at the same time fetching a very good price for the house.
House flipping tends to be simpler than buy and hold real estate investing because the flipper does not deal with landlord issues and the profit is made more quickly instead of it being done over time.
Depending on the market or community where a house flipper works in, the house flip professional can make a higher return of their invested dollars in shorter period of time if he flips the house quickly. This is in contrast to real estate investing where the investor has to wait for long periods before the property can be completed and sold to make a profit..
With buy and hold real estate, the investor makes money through income, provided his expenses are less than his income from rent. A major advantage is if the market is poor he can hold on and receive income and not worry about resale.
Additionally, the buy and hold real estate investor can also leverage bulk buying of renovation materials if he is going to do multiple properties at once
I am purely biased, but house flipping is my preferred way of making money in real estate, what do you think?