When making an investment in real estate, it is very important to understand all your alternatives to turn a profit. You can rent out the property for covering your mortgage as well as building equity. On the other hand, you could also fix your house and flip it, to ensure that the sale is made quickly for an amount larger than what you invested. These two are great alternatives and thus, you must consider these crucial factors before you make your decision.
When to Flip
If you want to flip a house, you must have adequate capital for investing in the property, to make the improvements and repairs that are needed. The process of flipping a house can be challenging, and hence, you must have adequate experience to understand what you are doing. Always do thorough research to understand the renovations that will affect the value of your real estate.
Moreover, you must also learn whether the market in this area will assist your new price point. Purchasing and flipping a house in a housing market that is depressed will not be easy. You must do the flip in a community that is buyer-friendly to ensure a high return.
When to Rent
When you flip a house, you will get quick cash. On the other hand, renting it comes with a monthly cash flow that enables a long-term profit, since the property appreciates over time. In case you don’t have an issue with being a landlord and you have adequate time to find reliable renters, renting out the property could be a better alternative for you.
This alternative also means that you will continue to own the home and you can stay in it later. Obviously, you must consider additional upkeep costs, such as repairs, utilities and property taxes.
The decision to rent out or flip your investment property will rely on your specific interests- long-term or short-term.
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