Investing in Real Estate: Should you Flip or Rent?

Have you ever wanted to try your hand at earning extra money with real estate property? Investing in real estate can provide great payoffs if you do it right, but how will you invest? There are two main ways to make money in real estate. You can buy an undervalued home and flip it to make a profit or you can purchase a home and then rent it out to earn monthly cash flow. Seems easy, but how do you know which technique is right for you? Consider the following as you make your decision about investing in real estate.

Pros of flipping a house:

  • Fairly quick return on investment, assuming you make the necessary repairs and sell the home quickly.

  • If you are able to sell the home your return is usually sizeable.

  • You get the satisfaction of taking a dilapidated home and turning it into the prize of the neighborhood. You’ll be a hit!

Cons of flipping a house:

  • There is no guarantee you will be able to sell the house after you’ve invested money. It’s common for a flip to become a flop...so be careful!

  • Renovating a home is very stressful and can take a lot out of you. Be sure to consider all of the necessary repairs before you start the process of flipping a home.

Pros of renting out a house:

  • Renting out your house will provide you with a steady monthly cash flow, assuming your tenants pay you each month.

  • If the home is in good condition and your tenants are responsible, your time commitment will be minimal.

Cons of renting out a house:

  • If there is a problem with your house, you have to deal with it...no matter what time it is!

  • Dealing with people is tricky. Be prepared to have to evict tenants and scout out new renters.

  • It can be difficult to sell the home if you have tenants living in it. Be sure to plan ahead as you write up the rental agreement.

As you can see, it really depends on the type of person you are. If you don’t mind the upfront cost and think you can sell a home quickly, flipping a house might be for you. If you’d prefer steady income and don’t want to shell out a lot of money of front, you might want to considering renting out your home.

If you were planning to earn some extra money from real estate, which would you choose?