If you’ve been thinking about investing in real estate, you may have considered flipping vs. renting and wondered which strategy would be best for you.
While both options can be a good way to build wealth, they also have their pros and cons. Let’s take a closer look at each option to decide what kind of investment strategy is right for your needs.
What is House Flipping?
Flipping is a strategy that involves purchasing a property, renovating it, and then selling it at a higher price than you paid for it. If you do this well, you can make a healthy profit on your investment—and that’s why many people choose to flip over renting.
But the flip will only work if the market is stable and enough buyers are willing to pay more than what was originally paid for the property.
What is Renting?
On the other hand, renting involves signing a lease on an apartment or house for a period of time (or “term”). When the term is up, and the renter moves out of their rental home or apartment, they are no longer responsible for paying rent or any other fees associated with maintaining their home or apartment. You do not make money by owning an apartment or house; instead, all profits come from renting them out and collecting rent from renters.
To Flip or Rent a Property: What is The Difference?
You might wonder, “What’s the difference between flipping and renting?”
The biggest difference between flipping and renting houses is that flipping requires active management, while rentals earn you passive income.
When you flip a house, you must do all the work yourself. This means that you’ll be responsible for everything from moving furniture to fixing problems with the plumbing or electrical system. In addition, if your house needs extensive renovations, you’ll have to pay for those out of pocket.
On the other hand, if you’re renting out a house, you must pay someone else’s mortgage (or rent). You won’t be required to do any of the work yourself—and if repairs or renovations need doing, then those costs will be covered by the tenant.
The conclusion is simple: If you’re looking to make money quickly, flipping or renting is probably the better option. However, if you need a regular income and have more time and money to invest, you could consider buying a rental property.