I'm just starting out in Real Estate and would like to know the pros and cons to buying and holding (with renters) vs. Rehabbing and flipping? Does anyone have experience doing both? Which offers the best bang for your buck/time?
Well the best bang for your buck is probably to fix and flip but f your new and just getting started then you have no real experience in doing this. If you at least start out as a buy and hold investor you will gain some experience and knowledge in that process that will help you when you start the other to flip homes.
I recommend the hybrid strategy of buy (low), rehab, then hold/rent.
Force up appreciation through the rehab, collect monthly cash flow, and set yourself up for a nice equity loan some years later to finance your next project.
I think this is more of a strategy question. Do you want an immediate return, but with unpredictable income and be able to quit your job in a short period of time? Or are you looking for long term predictable cash flow? That's bascially, in my opinon, the difference between fix n flip, and buy n hold. Fix and Flip allows you to make a bunch of money very quickly, but you need to focus all your time and effort on it (basically it becomes your job). Buy and Hold is typically done part time in the hopes of building up a steady income stream which will sustain you sometime in the future and/or in retirement.
So I think the question is, which one do you want?
Both are totally viable, depends on your market. I am a strong believer in buy and hold with owner financing preferred. I still have some rentals but I like buying and holding and leaving maintenance to the buyer.
But I do some flips as well when I need more cash for buys and holds. I do not do mortgages on investment properties anymore, so I need cash!
@Nicholas O. - buy and hold with seller financing is great!
Immediate bang for your buck - fix and flips will produce significant returns.
There are usually more opportunities to get into buy and hold with little money - creative financing etc.. Rehabbing requires cash - but its all on how you decide to structure it with the options available to you. Possible money partner? etc...
Buy and Hold can be achieved completely passively...
You need to work and invest time to consistently rehab property...
If you don't have at least $50,000.00 Cash in the bank then Buy fix and sell.
You NEED CASH do do this business.
If you are just going for a little cash flow you will end up losing money.
Unless you have at least 10 rentals you will end up losing money.
Everybody thinks they are gonna rush out and get "Rentals" and they don't realize how much work cost and aggravation there is involved.
So if you don't have a lot of CASH just Buy Fix and Flip until you have enough cash to carry you through.
I had 83 houses I know www.5000EZPZ.com
Fix & flip builds your income so eventually you can buy & hold
I totally disagree with your statment. "Unless you have 10 rentals you will end up losing money".
If you do your research, buy right, know your market, get decent financing, screen tenants properly, etc... then you will make money even buying your first one. How much you make, is an outcome of the deal plus your maket, but that's not the point.
ANY, REI investment costs money. It just depends on how you are willing to get it. Some people like to save their money to use while other peple can't save enough and must find their funding elsewhere. There's tons of ways to raise money in this business using only a little of your own or even noen at all. More difficult; of course. But definitely achievable. There are plenty of no-money success stories on BP.
How it looks to me is using fix and flip to generate most of your wealth, and buy and hold periodically over time is the way to go. Fix and flip will generate the bulk of your wealth, but the passive income streams of buy and hold will add up in the background over time.
I have done both. There is more risk in fix and flip - but better returns immediately if successful. You typically have more costs as you need a private investor or cash
Buy and Hold you typically need less money down, but there are maintenance and repairs and vacancy costs along the way. It works out as a good tax write off for me.
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