Rental vs. Flipping: Which, and why?

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I'm sure most new investors have this question. Although I myself am new, I know where I stand. I'd prefer to build a rental portfolio accompanied by periodic flips. But I'm curious. Are you more on the side of running a flipping business, or building an income stream with rental properties, and why?

I'm an excited aspiring investor in Dallas, TX. To all others of you in my area, novice or experienced, let's network!!

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@Account Closed I don't do Fix & Flip anymore. It has the highest tax bracket, takes the longest and is the riskiest. Generally a Fix & Flip runs for 3 to 6 months and and you can only do so many in a year. The market changes and you can be left trying to sell a property people can't afford. 

I start with the assumption that I am *not* going to put more than $25,000 into a property, "All in."

So, for instance, if the seller has $8,000 in equity, I give them $8,000 out of the $25,000 I have allocated and use the rest, $17,000 for the expenses. I Purchase (I take over the loan), pay escrow, pay title, pay carrying costs, pay utilities, pay for marketing, pay for property clean up, I do *very little* rehab and I keep $5,000 in reserves from that $17,000 in case I need it later. I've developed a spreadsheet for this model and I can tell pretty quickly if I am within my "safe zone". I assume 3 months to sell. Usually sells within 30 days though.

My typical houses are in the $150,000 - $300,000 range. I invest & coach in multiple states and In the Tri-Cities the numbers are a bit lower of course but relative to the same percentages. Say a property has a PITI of $1,200. I go to rentometer and see what rents are going for in the neighborhood. I then mark up the payment into the first quarter of the "red zone" on the chart, say, $1950. So the difference between what I pay and what I get is my monthly "cash flow" or $750 in that case. (That's from an actual deal.) People are willing to pay more if they will actually own the house rather than rent forever.

I do my comps and mark the sales price *up* beyond what things are currently selling for. Say, $30,000 above market. (Less of course in the Tri-Cities). It's "whatever the market will bear". I don't use real estate agents so I am saving the 6% fee, $12,000 in the case of a $200,000 property.

Then I offer the property on Owner Financing/Lease Option/Wrap/etc to business people who have great incomes, some money set aside and want to own a house but can't get financing because their Tax Returns don't show enough income. (Self employed get *great* tax write offs but that doesn't help when trying to get a loan from a bank).

The first Tenant Buyer who has $25,000 to put down and qualifies under DoddFrank gets the nod. If they have the money to put down, if they have a job that will support the payment under good lending guideline Ratios, (I used to be a loan officer and that is how I was trained), and If they don't have *unpaid* child support, if they aren't *delinquent* on student loans, if they aren't currently in a bankruptcy, if they aren't currently in a divorce, if they aren't currently in a lawsuit, etc. I don't care if they had a bankruptcy discharged last week. I don't care if they have lates and long ago write-offs.

So, I get the $25,000 back when the Tenant Buyer comes along, usually within a month or two. I get the $750 a month ($9,000 a year) cash flow and I don't care how long he wants me to carry the financing. Each year that goes by is another $9,000 to me plus the principal is being paid down. When he eventually does do a refinance, the difference between his payoff amount and my payoff amount I get to keep. This is a more *complex* technique but anybody can be taught how to do it. I read at Realtor.com that the average gross return on a Fix & Flip is about $25,000. This is *far* easier, faster, less risky and more lucrative. IMHO