E Property Flipping Or Rental?

When it comes to investing in the property market, ordinary people often do so with two things in mind. The most common reason is, of course, to own a house and avoid paying rent while the other is to turn it into a fixed income generator. That is, buy a house or commercial property and rent it out for periodic returns.

However, there is a third option that is more popular with sophisticated investors. Have you ever heard of flipping property? Well, most people have, but very few understand what it means let alone why investors would be interested in it. For those unfamiliar with the term, flipping property means buying property and then selling it at a profit after doing some renovation and reconditioning works.

This practice is generally associated with residential properties but based on recent property reports, most profits are garnered from properties that are located within business centers. This is because of the strong relationship a distance creates between residence and offices. For instance, according to reports flipping property within New York business centers can results in profits of anything between 40% to 200% depending on the proximity of the property to the business center and the market season.

2016 home flipping rate courtesy ATTOM Data Solutions

In fact, the NY post published a report that highlighted one “flipster” who made 165% in profits after picking up a property for $150,000 before selling it for $400,000 nine months later.

So, flipping property results in massive one-time profits, which could be appealing to investors seeking to invest those profits in other assets.

On the other hand, converting your property into a rental result in periodic payments, which also attract various costs along the way including maintenance costs and management fees for those using an agent to manage their property. Let’s take an in-depth look at how the two option stack against each other.

So, flipping property?

As noted in the brief description above, house-flipping entails buying a somewhat out-of-condition house and selling it for a profit after doing some renovation and reconditioning. People that are involved in this type of business are mainly seeking quick profits. The idea is to buy, renovate/recondition, then sell, and move on quickly to the next available property.

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Disclosure: The material appearing on this article is based on data and information from sources I believe to be accurate and reliable. However, the material is not guaranteed as to accuracy nor does ...

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