Hello, pardon my ignorance but as you can read in the title, which is more profitable? Might be a stupid question.
I've seen people talk about rentals and it seems like that is so risky and only slightly profitable due to maintenance costs and vacancy and stuff.
Flipping houses seems like a much safer bet with bigger gains judging from the success stories.
Again this is probably a stupid question with alot of missing variables. I have absolutely no knowledge in this field yet but I wish to learn more.
Well, how many rentals and how many flips?
That's an impossible question to answer without details.
When you learn real estate, you'll learn about the market and what opportunities there are in each area. As you learn the basics of real estate economics you'll learn the factors of production, land, labor, capital and entrepreneurship, that together with understand your market will tell you what route to take and the education you need.
That's why niche guru stuff doesn't always work, you don't have the basics of real estate in your tool box! You need to learn real estate to be keen in '16! :)
Lukas, the short boring answer is there is good to both. It's my belief if you only have a couple rentals it can be more risky should you have a bad tenant, or major problem with the property. My comfort zone for renting properties is atleast five, this way if you do have a bad tenant of need major work done on the property, your other properties help offset the financial burden. Obviously you have to work up to the point of getting five properties, which can take time but once you get there it's much more comfortable. Feel free to message me back with any further questions.
When looking at flips it seems like easy money, but things can go wrong with repairs, the market could change, or the house may not sell. Of course you plan to avoid all of this with the techniques you are taught, but nothing is guarateed.
Both have risk...both have reward as others have mentioned above knowledge about your area and your talents and your risk tolerance are the tools to aqquire first.
I rented houses for 12 years. It will drain your enthusiasm and empty your soul. Flip.
Hello @Lukas, Im fairly new at this but this is how "I" see it. Both have risks but the most you learn on that specifically area the most you minimize that risk. Basically, by flipping you get short time gain while buying and holding you can create long time gain and a more stable wealth.
From what I learn about Flipping house, Rental Vs Rehab
I took a 3 day seminar workshop and what they told me is, rehabbing is a step to get rental properties in order to build your wealth.
Being rich is having a lot of money but you still have to work, building wealth is having financial freedom in which you have money coming in without having to work.
Rehab give you a large amount of money in a short time, but you have to have a system if not you would have to work hard to find those properties to flip. Aside from that, if you have 30 rental property and each 1 you rent out with the cost of around $800-$1200 depending on the area. Of course those people who rent your property will be paying for the property tax and the house itself on your behalf if you have yet to pay the house in full. From each property you should get a check in return of $300-$500 profit without having to work. This is call passive income in which you now can have financial freedom. making around 10k-15k per month not having to work.
In my opinion rehab make money but depend on how you use it to create your retirement portfolio.
I hope this kinda give you an understanding about both side and answer your question.