First Time Investor Should I Buy and Rent or Flip?

8 Replies

First off this site has been awesome for getting information thanks BP!

I'm new to Real Estate Investing. I've been going back and forth on what I want to do. Early in my career, before I got into IT, I worked for a property management company. Part of me wants to buy a small duplex or something with few units that's easily manageable since I have prior experience. The other part of me wants to get into flipping homes. I purchased my first home in 2012 and have been slowly remolding it with the plan at some point I would sell it so that I can raise money to do another project, or rent it and purchase something else. The market seems to be picking up here in the Dallas area . What advice do you have on what is the best type of investment to start with SFH vs MF? How did you get started and what advice do you have for beginners?

While both involve real estate these are two completely different businesses.

Buy and hold is investing.  You put in your money and you earn a return.  If you buy good properties, double digit returns on your cash are possible.  And the returns continue as long as you own the property.

Fix and flip is a business.  You buy raw materials (junky houses, building materials), put in labor and produce a salable product.  When you sell it, you get a paycheck.  A big one if you do it right.   Or you can lose money if you don't.  You only get the single paycheck for each deal.  So, if you want an ongoing income stream you have to keep turning the crank.

Hi @Fitzgerald Valdez I'm here in Dallas too. The market has really heated up and even the foreclosures are getting bid up so I don't see how the wholesalers make money here. There are many people chasing to fewer deals, for fix and flip. I think looking at 2-4 unit properties have fewer people chasing them and buying them has an investment makes sense. At least that's what I'm trying to do. SFR are case by case and some people hold those as rentals too it's just I think have 2-4 tenants paying rent is better than 1 if you have a vacancy.

Thanks for the added insight into the Dallas market @Paul Lopez I noticed that a coupe of the SFH I did request info from a realtor friend if mine in the area I was looking were being bought fast.

Hi Fitzgerald,

Welcome to BP. Great resource for all that is RE!

I live in Frisco and invest all over the metroplex. Both you and Paul are correct. I too have seen the market heat up over the past year. A lot of people coming into the market - homebuyers, investors and even hedge funds. Trying to source good deals on MLS for either fix&flip or buy&hold rentals is very difficult. Just too much competition. The opportunities really lie in "off market" properties.

If you need assistance sourcing good deals, I can probably be a resource. Feel free to reach out to me anytime. Could even meet up for a coffee to chat since we are both "local."

Best of luck.

John

Welcome @Fitzgerald Valdez  

 I am in the same boat and have the same thinking as @Jon Holdman . To me and my non-existent experience, it seems better to buy and hold to have a continual stream of rental income verses the flip game.  Both work well but the turtle money seems better than the rabbit by not having to constantly find properties to flip.  Once I feel I am ready, I will lean more towards the MF buy and holds and maybe flip a SF by mistake one day as others have!  

My advice to any beginner is to allot a portion of time each day (like sleeping) to educate themselves ( BP forums, books, etc) as much as possible to have a better chance of staying in the game until things get great for them. 

@John Monteiro  as you can see I am quite new and eager to learn as well.  I am closer to Ft. Worth but would like to meet with you guys and grow together.

To answer that question, ask yourself what is your goal and need at this moment and for the near future. Cash or cash flow? Weigh your strengths, how much risk am I willing to take. Sounds like you have not flipped before, so that is a higher risk at the moment. How much cash do I have, If you buy and hold you may tie up all or most of your capital then what. Give this some thought and you will have your answer. Good luck

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