Anyone dabbling in both types of investments? My husband and I are thinking about buying our first flip. We currently have 3 rental units now and we weren't sure if we should just stick with renting. Opinions?
@Becky Wolfe , I don't think this is really an issue of getting others' opinions... it just depends on what strategies fit your needs, skills, time availability, etc.
I have both types of investments. Currently working on the first flip. I wanted to start out flipping but it required cash I didn't have and I didn't have a track record to back me up while asking for money. So I bought rentals at first. A good thing too, as I learned a lot from all the projects I have had to complete on the rental side of things. That prepared me in the best way possible for getting myself into a flip. I created the cash I needed from equity in my rentals over a few year period. You mentioned number of units, that's great that you have managed to put a few rental units together!! Hopefully all cash flowing nicely.......
I'm not sure exactly what you're asking as far as getting into your first flip but hopefully you learned how to eval a property well while buying rental units. That should allow you to know with your own eyes what a "good" flip opportunity looks like when it presents its self. I would make sure you have the cash on hand you need to complete the flip - probably most important. You will want to make sure you have extra funds on hand past what your budget calls for because you will likely run into things you could not see before rehab starts, especially if the home is an early build (pre 1940's 50's).
Have the cash (with a budget and a plan) since you built your profit into the deal at purchase, stick to the plan/budget.
Have extra cash
Think ahead - your end point of listing the property with an agent, start to set all that up before you finish so you can put a sign in the yard the day you walk out for the last time plus gather other info - appraisal etc etc. You can probably get either int or ext pics taken with your agent and let them get the marketing ready and add the balance of pics later on the last day of work etc etc. (Holding costs make a difference)
Check with your city/county office - some have tax revite programs which could be an extra selling point.
Do things right and don't cut corners to save a buck.
Always look and ask for ways to save money with your contractors and lumberyards, you can often get a discount of some type just by asking for available options.
I'm sure I could think of some other things to add, hope this helps
For me, I tend to keep my properties. I find that I cn make as much renting for one year, as I can make selling the property for a profit. I don't flip properties, unless, I buy a house and determine that it might not be the best rental, and can sell it fast for a decent return. But if a property will make a good rental, no sale.
@Jeff McCaskey. Thank you for all of your input. Very helpful! Renting has been going very well for us. We got some great deals and I think we both have learned a lot from our properties we have. We bought our properties as foreclosures and did put a significant amount of work into them. A book I read indicated we should stick with what we know with investments so that's why I was asking about what other people do. Thanks again for all the advice. Very much appreciated
@Arlan Potter Thanks for the advice. I appreciate it!
I am a buy and hold. But I am starting do to flips to help capitalize the buy and holds rather than using salary.
I am a buy and hold investor. While I could do flips, I haven't because I haven't found more "amazing" buy for rentals than I can handle. Therefore to turn the into flips, I would lose at my true long term goal, cash flow.
If I buy a fixer upper, I flip to increase the rent, attract a better tenant, and reduce the maintenace costs.
@Becky Wolfe - there are strong opinions on all REI strategies so I'll throw my 2 cents in ......
We've been flipping in our market for better than 10 years and it has proven very successful for us. For the past 5+ years, we've primarily acquired distressed properties via foreclosure auctions. This obviously reduces (and can even eliminate) risk, as we're always buying below current market value. As always, most of the work is on the front end prior to purchase and you'll only win 3 or 4 out of 100 - if you're doing it right. :)
If you need some guidance or assistance with fix & flip and/or buying at auction, feel free to reach out.
Best of luck!
I've done lots of both and am mostly doing flips right now, although I just rented two because they didn't sell right away. Just depends on your strategy and attitude. They are VERY different businesses.
Renting right now is a good business. You can buy at 50x rents(ish) and finance it at incredible rates AND get decent renters because they cant buy anything. Back in '06 it was way harder to get those numbers and anyone with a heartbeat could get a mortgage so the renters were pretty lousy.
Personally I like the big checks over the little ones and find all the little BS that goes with rentals kind of annoying. I'm sure there are plenty of people that find the headaches that come along with flips unbearable and like the "passive" approach better.
IMO, the more you learn to make opportunity work based on what comes at you the better. Got a wrecked one you can pick up cheap enough to flip, flip it. Got a light rehab you can slap some paint and carpet in for 10-15% discount to value, do it as a rental. Its nice to have some monthly because budgeting around just the big checks is a bear, but its real nice getting a few $40k+ check in between the rent rolls...
I am a local rehab investor. It is not as easy as you see on tv. I would suggest teaming up with someone who has done it a few years OR find a mentor to walk you through a few but that could be pricey.
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