If you Can’t Flip It, Consider Renting It

One of the situations that house flippers fear the most is buying a great investment property, completing all of the renovations, and then not being able to sell the house at a profit.

This situation can crop up for a number of reasons. Perhaps the market took a turn and you can no longer get the asking price that you expected. Perhaps your renovations were more expensive than you anticipated, so you need a higher price to make up for your costs. Whatever the situation, not being able to sell a renovated house right away doesn’t need to be the end of the world. You always have the option of converting your rehab investment into a buy and hold property.

Rental real estate investing is a profitable avenue for investors all its own. Many people buy houses that are already in good shape and then rent them to tenants for a few years before reselling the house at a profit. House flippers can use the same basic strategy with flipped properties that they are unable to sell. By renting a home that you’ve renovated for anywhere from six months to a few years, you can help cover your costs and minimize any losses that you might otherwise suffer from interest on loans or simply having your capital wrapped up in an unsold investment property.

Renting out an investment property has a number of other benefits beyond the income that you will receive in the form of rent. For example, there are a number of excellent tax benefits that go along with being a landlord. You may be able to write off some of the renovations that you made, and you will also be able to write off things like property tax and the expenses of visiting your property.

Of course, the most lucrative way to flip a house is to resell the property as quickly as possible. But if the housing market takes a turn or you are unable to get your asking price for any number of reasons, turning your flip into a rental real estate investment could help save you quite a bit of money. It’s certainly better than letting the property sit unused for months on end.

Fortunately, if you do find yourself needing to rent out a rehab property, you couldn’t have picked a better time to be a landlord. Rents are on the rise across the country. In fact, in some marketplaces it is more expensive to rent a property than it is to buy the same property. This is partly due to the fact that vacancy rates are incredibly low and that buying a home has simply become unaffordable for a large portion of the population.

Indeed, if you’re worried about the risks of house flipping in the current marketplace, rental real estate investing is an excellent alternative. Much like fix and flip projects, you can help finance your rental properties with buy and hold loans from banks or private lenders. The right rental real estate funding can help you maximize your investment while minimizing your personal financial risks. Many investors find rental real estate investing to be much more secure and stable then rehabbing houses. But of course, there is room for both investment opportunities in today’s housing market.