Find out the difference between flipping houses and the â€œbuy and holdâ€ in this Real Estate Investing Guide.
In the world of real estate there are several different ways to make money from buying properties. As a newcomer in the business, deciding which path is right for you might be your first and foremost concern. You might ask yourselfâ€¦
What is the best and easiest way to make money?
The answer to this question is quite subjective, actually. There is no route in the real estate business that wonâ€™t make you money if done correctly. As long as you are a hard worker and have the right motivation, you should be able to succeed.
Before you choose, you should know the differences between the different avenues of real estate. In this real estate investing guide article, we will discuss two of the most common strategies: flipping houses, and the â€œbuy and holdâ€. Along the you will find a brief overview, and then sections comparing the speed, risk, and reward of the two strategies.
Brief Overview | Real Estate Investing Guide
While these strategies might appear similar, they are in fact very different. House flipping is something that is relatively new in the grand scheme of real estate, while the buy and hold has been around for ages.
Historically, owning land is a way that people have made money for centuries. One of the main reasons the English started colonizing North America was because there was no more available in their own country. Private investors funded the first trip to Jamestown in order to establish a colony. They claimed land that they could later sell or rent out to the colonists.
House flipping has three main parts: buying, rehabbing, and selling. The idea is to buy a house that is below the market value for its type and neighborhood. By fixing it up, you increase its value significantly and sell it for a profit.
Buy And Hold
With a buy and hold, instead of selling the property immediately, you will hold on to it until the market changes and the property appreciates.
You can also make money while you are waiting by renting out the property to tenants.
One of the most apparent differences between the two ventures is the amount of time each takes. Which direction is right for you will depend on your lifestyle and how immediately you need to see a profit.
Flipping houses, if done properly, is a very fast process. After you buy the house, you might be selling it again in a month or two. Essentially as soon as the rehab nears its end, you want to put the house on the market and sell it as fast as possible. Keeping it in your possession for longer than needed might result in a profit decrease because of soft costs like insurance, utilities and maintenance.
Buy And Hold
In contrast, buying and holding is a process that...