When you buy a home and fix it up, the next step is to sell or rent it out. Many investors choose to sell the home so they can make a profit and move onto another property. However, renting out the home for extra income isn’t a bad idea, either. It all depends on what you are comfortable taking on and the investment goals you plan on reaching.
Let’s discuss the pros and cons to buying and holding and fixing and flipping. With the right information in hand, you can make the best choice for your circumstances.
Fix and Flip Properties
The greatest benefit to fixing and selling a property is that you can make a profit almost immediately. Your money isn’t tied up as it could be with other investments. Also, real estate is a safer investment. The real estate industry won’t tank in the middle of the day as the stock market can, so your investment is better predicted.
Fixing and flipping properties isn’t always easy, though. It takes a lot of money to buy the home and fix it up. Then, you must find a buyer who is willing to purchase the property. Also, finding good investment properties take time and there are tax issues to consider. The key to success in this industry is speed – the faster you can turn properties, the better.
Buy and Hold Properties
If you’re looking for longer term wealth, buying and holding property is an excellent way to achieve this. Rental properties earn passive income each month. And, while home prices can decrease at times, they almost always rebound. You can sit back, collect rent each month and sell the property at a later date.
There are, of course, headaches with renting out a home. Legal and management issues can be costly and burdensome, especially when compared to stock investments. However, with the right properties and solid business strategies, you can minimize your legal and financial risk and generate a steady income.
Which is Better?
Which one is better: fix and flip or fix and rent? It’s all up to you! Selling a property gives you a nice return and allows you to focus on other investments. Holding the property may come with additional headaches but can offer a passive income. Some people even choose to do both! The best approach is to review your financial situation and what you are comfortable taking on. Then, speak with a hard money lender like First Equity Funding to review your options.
