Hi- Perhaps this question has been asked hundreds of times. As a new investor would it make more sense to start flipping project or look for rental properties? Thanks.

@Eric Marofske: 100% agree. Gotta know your numbers which is something that is completely within the investors control. Rehab and tenants not as much as purchasing correctly. 100% agreed.

It's not fool proof however there is more of a likelihood it will get better over time. Every market is different and one should always understand the local market and while I agree that opportunity cost is a real cost that should be factored in, it does have less logistics and management necessary. Furthermore in general, if you are doing a flip, one would have a higher costs of rehab and therefore more capital risk. You can lose money any which way in this business; however, what has the best risk profile and lease active management? I'd counter that having a rental with minimal or no rehab has the best risk profile. If that were not the case then why do banks prefer lending to long term rentals versus short term flips? If your point of flips being safer were true, then wouldn't banks (who make money on their ability to evaluate risk and judge interest rates as compensation for risk) rather lend to flips versus rentals? Why then do we have so many hard money lenders in the short term arena to fill the gaps left by bigger banks and not nearly as many in the long term marketplace? Those are just two reasons - intrinsic and extrinsic - that I recommend starting with a rental. Flips can work and there are many many example on BP of people starting out that way. I did. But the original question was "As a new investor would it make more sense to start flipping project or look for rental properties?" That is my reasoning behind my opinion. I of course can be wrong just like anyone. Let me know what you think but I hope that helps and let me know if you'd like for me to elaborate on any of the points.

My advice is to rent. I flipped to start and looking back, it was too much risk for someone who really had no idea what they were doing. I would have benefited more from taking on a light rehab at most and renting. The risk profile of a rental is much more forgiving. Think about a property you rent and hold for 15 years, if you purchased it wrong in the beginning or put too much in rehab, the property may appreciate or the rents may go up and you will be vindicated. Time heals poor investment choice if you stick to them. Flips, there is no forgiveness and you will need to realize a loss right away. There are also more variable to manage and more moving parts that need to be overseen. I advise anyone I know who is starting off to find at least 3 rentals first and get comfortable with that model. I hope that helps and PM me if you want to discuss anything in specific. Happy Hunting!

totally depends on your goals and really to me it depends on your connections right? So if you have an awesome line on a contractor that you trust with your life sweet man generate some capitol with a flip. If you don't have a connection at all really and aren't that familiar with a rehab yourself then yeah maybe go with something that just needs a light painting and such and keep it as a rental. Look at your connections, passion, and knowledge and then base your decision off of that. No right or wrong answer.

@Angel Sanchez It purely depends on you and your investment goals. Everyone has different goals. Some of it also depends on the dynamics in your current market.

As a new REI investor should I really consider a flip?As a new REI investor should I really consider a flip?

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As a new REI investor should I really consider a flip?

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