Flipping vs Rental Property?

[Gabriel Martinez]

Hey everyone, I am a new BP member with really no REI experience, but currently engulfed with all the podcasts, forums and reading as many books as possible.

So my question is, how do you decided whether you're going to flip a property or use it as a rental? Does it depend on the area that the property is located and/or the shape that it is in? Does it depend if it is a foreclosure and you can possibly make more money off the flip as opposed to the long term rental? Or is it always a predetermined decision and if you buy it as a flip it is almost rare you change your mind and hold it as a rental? What are your thoughts please?

[Edward B.]

@Gabriel Martinez,

Mostly it depends on your goals and business model. While a lot of investors do both, the vast majority do one or the other predominantly. Flipping is more of a job with quicker payoffs, potentially, higher returns, and much more risk. Buy and holds is more passive with much longer time horizons.

The model I prefer is flipping properties to generate active income to purchase buy and holds for passive income. Beyond that it is mainly a numbers game and personal preference. There are areas that I like for rentals and property types that I prefer so if something comes along there and the numbers work, I will hold it. If it doesn't meet those criteria I would just look to flip or wholesale it. Also, if you need/want the money for other deals you may just flip it.