Need to be debt free: House Flipping vs Real Estate Investing Which ...

Which is preferable: property flipping or real-estate investing?

To get to an answer, it helps to define each term and put each one in perspective.

Home flipping is the method of purchasing a home then reselling it for a financial gain in the quickest time manageable. A house flipper tries to make the most money in the shortest time possible, period.He/she does not hold onto it for the purposes of income. As a matter of fact, the less time they own the home, the better their profits.

Real estate investing is all about buying and holding real estate and at a later date selling the house for a longer term profit.

The real estate investor might buy the property with the purpose of selling it at some time, but not for a while.

Which form of investing is the best for you and your family?

The main differentiators is house flippers want fast cash back while the real estate investor is more concerned with steady income.

House flipping pros buy homes way below market. The faster they sell the property or "flip it", the faster they can get their money back and take a profit.

Normally, the home will likely be purchased at a cost substantially less than its market price (in the cover anything from fifty to ninety percent lower than the market will bear).

Renovating a fixer upper is a popular way to house flip. The flipper buys a house and renovates it in a short time and then sells it.

Renovating is much cheaper as one can precisely estimate the cost of materials and labor required to do it. It is also possible to get hold of experts who know the specified refurbishments considered necessary and therefore the house will have a very good look in the end.

This permits the house flipper to get a quick market for the house and at the same time fetching a great price for the house.

Flipping houses is less of a hassle because you don't need to deal with renters and other kinds of land-lording issues. the house flippers, renovates and sells, its very simple.

Dependent on market conditions and location, the house flipper can make higher return on investment (ROI) if he/she can manage to flip the houses in short times. In contrast, the buy and hold real estate investor makes his return over time through rental income and appreciation over years of holding.

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.

The profits fetched can also be higher if the investor is getting benefits such as economies of scale where he/she is able to buy building materials at a much lower price.

Although I prefer house flipping, I know the benefits of buy and hold real estate investing so I can see it both ways, What is your opinion?

Source: http://needtobedebtfree.blogspot.com/2012/07/house-flipping-vs-real-estate-investing.html

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