To Flip or Buy and Hold in 2017?

As with most real estate matters, there isn’t one simple answer to the question of which is better: flipping houses or buying and holding real estate. Both buy and hold investing and house flipping have their advantages and drawbacks, regardless of the year. In 2017, we expect there to be a strong market for both options. Which option you choose is ultimately a matter of personal preference.

Benefits of Buy and Hold in 2017

The last few years have seen rent prices go through the roof around the country, and rents will likely continue to rise into 2017. Vacancy rates are currently incredibly low, and more people are favoring city living, which often means fewer affordable buying options. As a result, landlords are raising prices year after year, and their tenants are continuing to pay.

If you choose the buy and hold route, you will enjoy great monthly income from your tenants that you can pocket while pursuing other investments or interests. Rental real estate investments are great for retirees and people who want to dabble in real estate on the side.

Drawbacks of Buy and Hold in 2017

Of course, being a landlord isn’t an easy job, but you always have the option to hire a property management firm to handle your properties for you. If you choose this option, your profits will be a bit lower, but you’ll have much more time to do other things. Plus, when you ultimately sell your property, you’ll likely enjoy a great final return on your investment.

The main drawback of purchasing a buy and hold property now is that prices are rather high. The market is cyclical, as we all know, and we are currently near the upper end of the cycle. Of course, if prices fall over the next few years, a buy and hold investor can simply ride the wave to the next peak.

Benefits of House Flipping in 2017

House flipping reached its highest levels since 2007 this year, and those numbers are likely to remain high in 2017. The market is competitive at the moment, which means that most successful house flippers working right now have been at this for a while. But with the right house flipping loans and strong guidance from an experienced flipper, newcomers can make their mark in 2017. House flipping is in many ways harder work than buy and hold investing, but it also brings bigger and quicker profits.

Drawbacks of House Flipping in 2017

While still on an upward trend, home prices are likely to plateau next year. That will create challenges for many house flippers working in and around their home cities. The best way to ensure success in 2017 is to look to the hottest housing markets, which may mean flipping houses out of your local area or even out of state.

This may be challenging for some house flippers, but the rewards will be worth the effort. In Los Angeles, for example, sales growth is expected to hit 6% and price growth is expected to near 7% in 2017, according to realtor.com. The median home price in LA will likely hit $675,000, which may feel out of reach for some flippers, but with wisely chosen rehab loans for real estate, investors can earn the greatest profits in expensive cities like LA and San Francisco.