Hey, Investors! Is it better to buy a property and quickly turn it (otherwise known as “flipping” the property), or should you hold onto it and become a landlord?
Answer: Both are right…and wrong!
While trying to answer this question, it’s a good idea to ask yourself a couple of questions:
What is the local market like in my property’s area?
What is the likely trend? What might make property values rise or fall? Which is more likely to happen?
How much ROI can you get from renting? What is the fair market rent value?
How much money can you get from buying, renovating, and flipping? What is the fair market sales value?
How much money can you make from the amount you expect the home to appreciate?
What are your financial goals?
What are your immediate cash needs?
The MOST important thing to evaluate is whether you are in a financial position to be flexible enough to decide. Your situation may decide for you.
You might have some personal expenses that require you to get back your money quickly.
Answer: Flip it!
You may not have time to renovate and flip the property. You may have to hire a property manager to handle the landlord duties while you still have enough to pay yourself monthly.
Answer: Rent it!
Your property may be in a neighborhood that is declining. Perhaps, the crime rate is rising, or jobs are leaving without any jobs to replace those lost ones. Maybe a freeway, a factory, or something else undesirable will be built beside it.
Answer: Flip it!
Your property is in an area that is getting more high paying jobs, or the local government is spending a lot of money on education, or your property is in the path of progress or obvious suburban sprawl.
Answer: Rent it! (and sell it later)
You are in an area where there is more demand for renters (driving higher rent amounts) than there are home buyers (driving down house prices).
Answer: Rent it!
You need to build your asset base so that you have more to invest later.
Answer: Flip it!
You want a good, steady income stream and do not care as much about having a large chunk of cash available.
Answer: Rent it!
Is it better the flip a property or rent it and become a landlord?
Answer: It depends on your specific situation.