Real estate investments are a great way to make additional income or even establish a steady, reliable income long-term. However, it can be difficult deciding whether or not to flip a new home or establish it as a rental property, and there are many factors that often go into the decision. By having a complete understanding of the benefits of both flipping houses and owning rental properties, you can make the right decision for you. The following is a complete overview of how to choose between flipping or renting.
The Pros of Flipping Houses
The most notable and obvious benefit of flipping a house is the substantial amount of money all at once upon the time of sale, but there are other reasons to consider flipping also, such as the following:
- Fast, substantial ROI
- Less stress in the future
- Financing is easier
- Easier to find good properties
Along with the quick return on your investment, you do not have to worry about stress from frequent repairs in the same way you might with rental properties. Also, it is easier to find financing opportunities since you will not be holding the home for long.
The Pros of Rental Properties
The quick income from a flip may sound appealing, but there are certainly advantages to having a reliable rental property as well, including:
- Steady cash flow
- Increased ROI
- Tax advantages
- Increased home value
Many find it better to have constant income each month, which is the case with rental properties. Also, there are tax advantages to consider as well, such as paining lower capital gains taxes. Then, of course, you always have the option to sell your home at another time. In fact, many rental property owners sell their home for far more due to appreciation.
Other Factors to Consider
The answer to whether it is better to flip or rent may differ depending on the home in question. A home that is close to where you live and in good condition may be better to rent, whereas a home that is outside of your area that is hard to visit regularly may be best to flip. Certain areas also rent for more than other areas, and it is important to know your monthly payments as well as the rent amount you can charge. You should also consider how much time you have available both in the immediate future and long-term, in addition to your preference as to whether you would prefer fast income or steady income.
How to Decide Which is Better
Your decision is largely based upon your goals. If you are in it to make as much profit on your initial investment, then renting may be best as appreciation may raise the home value over time while in the meantime allowing you to collect monthly deposits. If you are in it for a quick profit that you can use to invest in more real estate properties, then flipping may be your best bet. The important thing is to have fun, do your research and make a confident decision.
EXIT Realty Bob Lamb & Associates is Murfreesboro’s most innovative real estate team.
EXIT Realty Bob Lamb & Associates
2630 Memorial Blvd, Murfreesboro, TN 37129