Poker buddies looking to make a quick buck, young families looking for a profit option, retirees seeking a project, are all finding their way into the fix and flip market. By making the repairs, putting the homes back on the market, the goal of turning a nice profit in just a few months is attractive for pretty much everyone.
There are many addictive TV shows you may have seen highlighting the process. But when was the last time you saw a TV show about a couple buying a house, fixing it up and renting it out? Maybe never.
However, the rental route is a viable option for making money in the real estate market. Many factors can be involved in determining whether fix and sell or fix and rent may be a better strategy for you.
Let’s take a look. Remember, you can find more resources about fix and flip on CenterStreetLending.com.
What kind of an investor are you?
It’s essential to ask yourself some introspective questions to see how you may function as the owner of a rental property and why that investment may benefit you. Are you are risk-taker or are you more conservative? Do you have a long-term vision that will build a nest egg for your retirement? Or are you looking to make a quick buck and move on to the next thing?
Fix and flip is designed to give you a quick profit. It also keeps opportunities flexible, if you decide to move onto flipping another house or an entirely new business route. Of course, fix and flip also runs a great risk if you run into higher rehab costs than you expected or hit a downturn in the housing market that cuts into your quick profit or worse, leaves you with a loss.
Historically, home prices have increased an average of 3 percent per year, so as you hold the property, your resale value is going higher.
Rent and hold will not net you a quick return on investment, but it could lead to a long-term profit that’s even greater. First, you have the monthly income generated by the renters. Second, your house is building equity the longer you hold it. So these are some factors to consider.
Are you prepared to be a landlord?
Rental properties also requires responsibilities. There are maintenance costs involved in renting a home, but they should be negligible in the first years if you complete an efficient rehab. It’s the renters who will fill your property that will require most of your work. Do you have the patience and people skills to deal with finding the right renters and handling their needs over a long period? You also can turn the home over to a property manager, but that eats into your profit.
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