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 Real Estate Investors: Is Flipping Right For You? |
Property investing can be viewed as a difficult issue, however that's just since there are so many decisions. When you invest, you have a virtually unlimited infinite array of manners in which to profit. But that means that you must be able to to make decisions. You have to decide how much you will educate yourself regarding each element of real estate investing, whom to add to your team, where to seek properties, whether a property is a good one for you, and so on.
A key question you will find yourself faced with is how you will use a property once you've bought it. You might not be the kind of investor who wants to purchase a property and hold on to it for a long time. Maybe you don't want to have to grapple with tenants and property managers or to see to the maintenance of a property. If these activities don't appeal to you in the slightest, your other option is flipping.
Flipping a property is selling it immediately after you buy it, perhaps even at the same closing. At the latest, flippers tend to start preparing to sell a property the day that he or she purchases it. Some will even start the process prior to even purchasing the property, which is risky business. However one goes about doing it, flipping always entails hurrying to the auction block, as an empty property always represents a liability.
However, if you hold a property, you get the opportunity to increase its worth. If you get a great deal, the price you paid for it will probably represent only a drop in the bucket compared to what you can potentially make off it. And when you finally decide to go ahead and sell it, you will be able to do so at your leisure and get a higher price than you would've by flipping.
This holds true particularly if your property is a multi-family dwelling like a high rise apartment. If it is a good property in a good area, and you take care of it, chances are that occupancy is going to stay high. With a property like that, your earnings tend to increase exponentially. If you manage your property well, that is almost certain.
Speaking of property management, you will need to decide between performing that function yourself and hiring a management company to do it for you. If you own a particularly large property, or if you own many properties, you will probably have to employ a property manager. Ken McElroy, author of The ABCs of Real Estate Investing, strongly suggests that you employ a real estate management company so that your talents and your time will be used more efficiently elsewhere.
Those are the types of things you will need to keep in mind if you hold a property.
In the end, however, whether you decide to flip a property or hold on to it depends on what you'd rather spend your time doing. Perhaps you would enjoy the fast paced work that flipping entails. Maybe the adrenaline rush sounds like an adventure to you. If this is the case, you should educate yourself on the proper way to flip properties (i.e., wait till you actually own a property to arrange a sale and don't approach buyers at the very closing at which you purchased a property).
However, if the concept of maintaining a piece of real estate appeals to you, then purchasing and holding might be the way to go. Depending on your talents, you may be able to make more money working one way as opposed to another. It is completely up to you.
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