Flipping houses and rental real estate investing both have their fair share of challenges, and both have a number of great perks. If you’re trying to decide whether flipping houses or renting homes makes more sense for you, take a look at these pros and cons to help weigh your decision.
House Flipping Pros
House flipping can bring you amazing returns on your investments in just a few months. Great house flippers are able to make anywhere from 15% to 35% on their house flipping investments. House flipping also has the benefit of being a short-term commitment. You could either make a career of flipping multiple houses at once, or you can give your attention to a single flip for three to six months and spend the rest of your time on other pursuits. Rehabbing homes is a great choice for aggressive investors who have the time and energy to throw their whole weight behind a project.
House Flipping Cons
Flipping houses can be higher risk than other types of investing. There’s always the chance that things will go wrong, that you’ll run out of money for renovations, or that you won’t be able to find a buyer quickly on the tail end. House flipping can also be extremely competitive. If you’ve never flipped a house before, you’re going to want to do a lot of research and find trusted partners who have successfully flipped houses before to help guide you through the process.
Buy and Hold Investing Pros
A buy and hold investment strategy is a great way to make passive income. In addition to the profits you can make by reselling the house at an ideal time, you’ll earn monthly income from your tenants. Being a landlord comes with a number of tax benefits, and it’s something that you can do part time. A buy and hold investment strategy is ideal for someone who wants to earn extra income but doesn’t have the time or energy for house flipping.
Buy and Hold Investment Cons
While the risks are lower with a buy and hold investment, there’s still a chance that you’ll have trouble renting out your unit, which can cost you significantly as the months go by. Being a landlord means you also have to take care of maintenance issues and issues with tenants. You can help alleviate these troubles by working with a property management firm, but that is a cost that will eat into your profits.
In the current marketplace, there is ample opportunity for both house flippers and buy and hold investors. Whichever option you think is best for you, you can help reduce your risks and ensure that you make well-informed decisions by working with a private money lender like ZINC Financial.
We offer both house flipping loans and residential rehab loans at competitive rates. Give our office a call today at 559.326.2509 to learn more about your current investment options.