I have started to venture into the Real Estate business. Which is the better option? Flip property to build capital or purchase properties to ensure financial future. My plan is most likely as follows: Purchase 5 - 10 properties to flip for a profit to build capital. Once capital is in place then plan for retirement... Purchase 5 - 10 rental properties to pay off within the 1st 10 years to ensure complete monthly rental profit to supplement retirement. This is of course the simple and assume everything works perfectly version... any thoughts?
Disclaimer here... this is all 100% my personal feelings on what you asked... *NOT* any kind of financial advice because I've never checked into flipping more than casually hearing about people doing it. My first question would be how the current market would affect profits. When the economy is bad doesn't seem like a good time to be happy about flipping profits. I guess the alternative would be to buy real estate when it's low and then hold out on flipping until the market picks up a bit... I think it's starting to in some areas. But that could probably open a whole lot of problems. So anyhow, I'd be too chicken to try to flip in a bad economy and would choose the rental properties. I suspect you'll also get some answers saying the opposite.
I would think it would be a better investment for you to hold onto your properties and use them as rentals. However this is only the case if you have enough upfront capital to be able to afford this. I think a good option would be to do a couple fixer uppers and flip those really quick so you have some liquid money and then start investing in rentals that you are going to hold onto.
Flipping too fast will lead to another bursting of the real estate bubble. As it will unjustly increase real estate prices and increase the costs of living for people who actually want to live in those houses, leading to having less money to spend, which leads to less money circulating in the market (due to higher mortgage or rental prices), causing a recession and when income for businesses decreases, they will have to reduce employee income or lay off employees, which will reduce people's ability to pay for new properties and this will cause demand to drastically fall in the real estate business, with investors and homeowners unable to sell their houses at the 'market rate' therefore making a loss. Not only is it a grossly irresponsible practice as a citizen, but also a reflection of very short sighted thinking as an investor. What I would recommend is keeping rental properties around for a few years and only selling them when you stand to make a high profit out of them (set a goal for yourself. 20%? 30%?) rather than flipping properties for small change.
I've always thought that renting is better over flipping. There are clear pros and cons but renting will most likely earn you more money faster and with lighter consequences for failure.
It really depends on when you need the money/why etc. Flipping obviously takes time and effort but you can net a good amount of money from selling the place. Renting provides relatively stable "income" for the course of the lease. I'm not certain how long it takes to flip a house but I'm sure it would be quicker than renting for a while year and thus give you more money now... right?
I would rent first and then flip, not the other way around. Flipping is to unstable as a business, and if you don't have any sure money as a back-up, you might fall flat on your face. Rentals are a sure bet and they will give you financial leverage when you go to a bank for a loan to flip a house.
It all depends on the markey you're in. If people are looking to buy homes in your area, flipping is the way to go. Otherwise, try the rental plan. The latter is a safer investment, too.
I am also invested in the real estate market as I have rental properties and, I also have a house that I always working towards flipping. And, whatever I state here is my personal opinion from my experience and nothing more. My rental properties are all paid for and, generate income for me so I intend on keeping them. At least until they no longer make me money and, then I will begin fixing the money traps up to flip and, make as much as I can off them in that market. If you are just getting into this market then I would suggest researching your area and, finding out which types of real estate businesses are making the most money. Whatever it may be then that would be my choice for which business I go into. Always remember with flipping that so long as you set a budget and, stay under it and sell the house for your least expected profit amount then you can make money flipping houses. Just research and put good quality work into it.
