Investing in property has its risks, but when done correctly the returns far outweigh these. Choosing an investment strategy that you’re comfortable with and that meets your needs may help you lower the risk. In the long run you’ll also find it easier to navigate the property market if you have a strategy you’re comfortable with. Two such real estate strategies include flipping property and letting. Each has its own benefits and drawbacks. Let’s briefly go over these to determine which is best for you.
What You Should Know About Flipping Homes
To successfully flip a house, you’ll need enough capital to complete renovations and repairs. The biggest risk involved in flipping is that you aren’t guaranteed a profit. After you’ve spent all that money you may come to find you’re only breaking even. To avoid this you’ll need to look at the markets conditions, and forecast (with great accuracy) what those conditions might be in a few months once the home is complete. You’d need to take into consideration the properties location and buyer sentiment. Flipping can be a very time consuming task, but once you’ve gained you fair share of experience the rewards can be significant.
The reason many property investors choose to flip is because they’ll instantly increase their equity and won’t have any additional costs associated with long term management of a property.
What You Should Know About Letting Property
While flipping property gives you equity quickly, renting is an excellent way to retain a consistent flow of cash that should help you pay off the mortgage. In addition you’ll reap a return as the properties value increases over time. There are minor drawbacks to renting that can include managing the property (which could be costly), finding and screening suitable renters and paying property taxes.
However, in the long run you would probably gain more equity through renting than flipping as your tenants would’ve paid for the mortgage and by the time you sell the home its value would have increased.
Deciding whether to rent or flip property would depend on your specific goals, your appetite for risk and the capital you have to invest. Having a trustworthy and reputable real estate professional to assist will make the process easier. Why not contact me so we can discuss your investment strategy and the type of property you’d like purchase.
Thinking about getting into real estate investing? Contact my associate Cal Ewing for some expert advice!