Is House Flipping a Safe Investment?

With the housing market starting to improve I have recently heard and read more about flipping property than I have since the housing bubble burst. House flipping refers to the business model where you buy property and quickly turn around and sell it for more than you paid. Many people think that flipping property is the way to grow wealth in real estate. I believe that buying and holding income-generating assets like rental properties is how you build wealth.

I personally think that house flipping is to risky, I would even go as far as to say it's as risky as day trading in the stock market. This model generally requires that the house was purchased at a great discount and you are banking on appreciation to make money rather than making money through cash flow (rent payments, improved operations, etc). There are a lot of external factors that you have no control over that are going to help or hurt your bottom dollar.

Prior to even contemplating home flipping, you have to ask yourself how long you can hold a house before you see a return on your money, Crunch the numbers to determine how long you can manage to have your money tied up while the home builds value or until you can sell it. If you plan on renting the house out for a time don't expect that you will have 100% occupancy or that no repairs will be needed. In order to make your flip a success you have to be negotiable on the price otherwise you could wind up with it sitting vacant for months. What do you think, is house flipping a good strategy to make some quick cash as the housing market picks back up? Or is it to risky in the event you purchase a house that is a money pit?

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Dulcey is a member of Rentec Direct who provides Property Management Software, tenant ach payment processing, tenant credit check, and criminal reports for property managers and landlords.