What makes a property a long term investment?

[Nicholas Estevez]

I know it's a preference to either flip houses or keep them long term. I've talked to a couple of real estate agents and loan officers who have flipped before and they prefer flipping. They rather make the 40k on the flip that year than the 6k let's say in cash flow. They say they do 4 or 5 flips that are good (hypothetically speaking) and then buy a house all cash and that's their investment property long term. I guess seeing it like that makes sense, but feel like that's the long route if the end goal is to live off of cash flow when you retire. I'm only 22 and trying to gain as much knowledge as I can. I will be purchasing my first house a year from now and I'm trying to see my options past that. I would like to get some more advice from anyone who has experience or some examples are why its better to sell that keep long term. 

[David M.]

@Nicholas Estevez

Don't forget that flip income is earned income taxed at your marginal rate and subject to self-employment taxes.

As to your question, it really depends....  depends on your goals, your finances..  also location, location, location.  You might find a property that maybe you don't think its a good neighborhood for renting.  So, flip it.  maybe its a little too far away so you don't want to manage it.  Maybe there is just this whopping profit that you might as well take it now.  maybe you need to sell it so that you have funds to do your next deal.

Buy and hold doesn't necessarily mean you hold it until the house falls apart.  No one can predict the future with certainty.  Lets say you bought a property say 3 years ago have been renting it out.  Lets say the tenant moved out this past summer.  With the market so hot, you saw a chance to really sell it at a profit especially since it'd be taxed at the capital gains rate of 15%.  so you sell and now you have more cash for a down payment and find two more properties to invest and rent out (hypothetically speaking).

Much also figures on your investment strategy.  are you expecting to make money on the property via cash flow?  Appreciation?  Both?  Its all up to you.  Maybe you fixed up a house but its not in an appreciating area historically.  Its up to you if that current value is "good enough" or if you want to also rent it (assuming it rents well).

Life with throw all kinds of balls at you --- fast balls, curve balls, etc.  Sometimes you need to adjust your investment plans.