Should I Invest in Homes Or Flip Them?
I'm often asked by buyers who are very interested in making money in real estate what they should do with the property once they get it.
There are a few factors you should consider before jumping into purchasing homes.
Part of the decision depends on what works best for you.
No matter what the market is like, you can make money.
A rising market.
Markets that are going up are almost always the best to choose.
However, this is especially true for investors.
If you buy a house during this time, it makes good sense to keep.
As time goes by, you are going to build equity.
Plus you can rent the house out and that will take care of the loan payments, so you don't have to.
Investing is a long term commitment and the equity can take lots of time to add up.
Stay educated on the changing market.
If home prices appear to rise and fall a bit, don't get scared.
Instead keep yourself informed on what programs, loan issues, unemployment rates and other factors that may affect housing prices that could cause a big change in real estate.
Often there are warnings and whispers that go around right before the shocking change in home prices.
Make sure you are listening.
In a declining market.
When the market is at a low and you aren't sure where it's going, it may be best to buy and sell quickly if losing equity for a number of years really concerns you.
For now, the 90 day flip rule has been suspended and you don't have to wait three months to sell a house after you buy it.
Flipping takes more effort and knowledge.
Flipping houses is one great way to make a lot of money fast, but remember that the less prepared you are, the more it's a gamble.
You're buying a house, paying money to fix it up and selling it while still making the mortgage payments.
If you know how to get through a flip fast, it has the potential to be very lucrative, or it can be a financial disaster if you make any miscalculations.
Consider the big picture of investing.
Even if you buy a house, rent it out and see the market price decrease, you are still okay as long as your renter is covering the cost of the monthly mortgage payments.
Does it really matter that much that the house isn't currently worth if the loan covers the bills 100% and you know the market will improve sooner or later?
There are a few factors you should consider before jumping into purchasing homes.
Part of the decision depends on what works best for you.
No matter what the market is like, you can make money.
A rising market.
Markets that are going up are almost always the best to choose.
However, this is especially true for investors.
If you buy a house during this time, it makes good sense to keep.
As time goes by, you are going to build equity.
Plus you can rent the house out and that will take care of the loan payments, so you don't have to.
Investing is a long term commitment and the equity can take lots of time to add up.
Stay educated on the changing market.
If home prices appear to rise and fall a bit, don't get scared.
Instead keep yourself informed on what programs, loan issues, unemployment rates and other factors that may affect housing prices that could cause a big change in real estate.
Often there are warnings and whispers that go around right before the shocking change in home prices.
Make sure you are listening.
In a declining market.
When the market is at a low and you aren't sure where it's going, it may be best to buy and sell quickly if losing equity for a number of years really concerns you.
For now, the 90 day flip rule has been suspended and you don't have to wait three months to sell a house after you buy it.
Flipping takes more effort and knowledge.
Flipping houses is one great way to make a lot of money fast, but remember that the less prepared you are, the more it's a gamble.
You're buying a house, paying money to fix it up and selling it while still making the mortgage payments.
If you know how to get through a flip fast, it has the potential to be very lucrative, or it can be a financial disaster if you make any miscalculations.
Consider the big picture of investing.
Even if you buy a house, rent it out and see the market price decrease, you are still okay as long as your renter is covering the cost of the monthly mortgage payments.
Does it really matter that much that the house isn't currently worth if the loan covers the bills 100% and you know the market will improve sooner or later?
Source...