More and more people want to invest in real estate these days. In today’s market, is it better to fix up a property and flip it, or to hold onto that property, either to live in or rent out?
Honestly, it depends. What are your goals?
If you’re looking to make some quick cash, then flipping homes is probably a better strategy. You can move a property and see a profit within a few months. The biggest downside to this strategy is that you will be taxed on this quick income exactly as if it were part of your regular annual income.
If your goal is a long-term investment, then holding on to the property may be a better strategy. When you buy and hold property over a period of time, its value will typically appreciate over a period of time. Note that the market is not always predictable, and it will expand and contract occasionally, so property values will rise and fall, but over the long run, values trend upward.
Looking back at market values from 20 to 30 years ago, and it’s clear that prices have gone up! In addition, rental-income on property owned is an excellent investment strategy. Real estate that is cash flow producing for you will pay you every single month. By obtaining financing, you can leverage your investment to get a higher return on your down payment.
If your strategy is long term, it’s definitely better to buy and hold and rent that property. Let it pay you every single month. If you do have a loan on it, the balance will go down every single month, which means you owe less and less. When it’s paid off, you own that asset free and clear and it continues to put money into your account every single month.
If you need quick cash, flipping can be a good option. Again, it all depends on your goals. Honestly, many smart investors combine these strategies. They may do a quick flip to get enough capital to make a long-term investment, for example.
If you have any questions about this or help with any other real-estate questions, just give me a call or send me an email. I would be happy to help you!