The Better Investment?

Question

J Scott · Answer

I apologize if my point didn't come across as intended...

To address your question more directly:

There is no way for someone who doesn't know you, your situation, your goals, you expertise, your location, your time availability, your acceptable amount of stress, etc. to tell you which path is better for you.  Flipping houses and owning rentals are only similar in the sense that the underlying asset is property -- beyond that, they are completely different strategies that fulfill completely different investment needs.

Every investment strategy requires you put in some combination of the following:

- Time

- Cash/Credit

- Expertise

And every investment strategy generates some combination of the following:

- Profits

- Cash Flow

Without knowing what you have to put in and what you're looking to get out, there is no way anyone can recommend a particular path.

J Scott · Answer

What is better:

- Italian food or Chinese food?

- Driving or flying?

- Watching a TV show or a movie

- Reading fiction or non fiction?

- Playing tennis or golf?

- Push ups or sit ups?

Omar Khan · Answer

@Joey Isidore I think @J Scott raised an excellent point. There is no "one-size-fits-all" investing idea/approach. Otherwise, everyone would pile into the same investment and all potential profit would disappear.

Gilbert Dominguez · Answer

Many people think resal estate investing it like building something out of lego blocks, that A leads to B and B leads to and connects to C in only one way but the truth is that real estate investing is much more flexible than that and can vary quite a bit.

For example for the person who wants to manage each and every property themselves then buying whatever is close or let's say within a 45 minute drive or less form their primary residence and others perfer to use property managers etc. Some people like all the aspects of single family homes and others perfer dealing in mulit family complexes.

Myself I have a building  background and possess journey level skill in almost all trades except maybe doing concrete work and I am also an architectural designer so I perfer properties that can be increased in value through forced appreciation and look for properties where the zoning, set back, and other requirements allow for adding square footage to a building but others perfer invest in turnkey properties already fully occupied  whereas I like working with empty buildings.

What is best for you is something you maybe have to discover for yourself. Much depends on the deals you will find. Just dealing in multi family properties does not in and of itself mean you will always be more profitable, or that those properties are the easiest to manage and maintain etc. etc.

I do not like dealing with renters and prefer to deal only with the buildings. Other people thrive on generating cash flow.

Generally what is best in real estate is to be able to buy low and sell high, put out x dollars and take in 2x dollars, and there are one million ways to accomplish that. I like to make a great profit and deal with as few properties  as possible and some people like to have 1000 uits to manage and earn from.

In the end everyone finds their own answer as to what is best for them and they use that knowledge or understanding to formulate strategies on how to accomplish their goals.

I hate to get in a rush at any time and perfer to buy every single property I can in all cash others like to use other people's money because that makes sense to them and they do not mind dealing with loan and interest payments, they learn to use that to their advantage but to me that would not be an advanatage because of the way I want to live my every day life. Set your goal and start to figure out how you can accomplish them including time lines.

You will find one of the things you have to accomplish is to become patient and disciplined.

You may be surprised to find out that not all munipalities will work with you. I may buy a property and plan to fix it up within one year but the location city may say, "no way", " we will allow you maximum 6 months or we will order the building torn down and charge you for it". Knowing what a local government stance is regarding property ownership may limit what you have in mind or may not even allow it or they may place you on a time line that will not work for you. etc. etc.

You may be considering buying 10 row houses at a particular location at a particular time but then if you fail to do some research  find out that the ciy plans to put an airport right next to where the houses you want to buy are.

You may be into apartment buildings and one day you find what appears to be a great deal, a 300 unit apartment complex on the market for an asking price of $200k but then later you may find that where the apartment building are used to be an oil refinery and now the ground is contaminated.   ouch !!!!!

There is defining what you want, how you can go about accomplishing that, and knowing how to do a good job of doing your due diligence.  There is also market availability to deal with, supply and demand and on and on and on.

Simply find out what works best for you.

Michael J. · Answer

J Scott actually makes a great point. There is no way to answer the question you have. It depends on what you want to accomplish and what your goals are.

Buying rehabbing and selling houses and buying multi units to rent are completely different business models. IMO flipping houses is not investing, it is a business and you pay earned income taxes on it unlike rental income.

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