Flipping vs. rental property investment

[Michelle Denardo]

Hi! I’m interested in investing in real estate but would like to hear what others think about flipping vs. rental property investments? Are there pros and cons that you’ve seen in your experience? How about for someone just starting out?

[Jeff Piscioniere]

@Michelle Denardo either way congrats on choosing an endeavor that if done properly will lead to a life of financial security out into the future! I think the first thing you might want to determine is if you’ll be doing this yourself. Do you have any real estate experience? Any hands on skills? Does your regular life allow you the time to address the accompanying responsibilities? If any of those answers make you suddenly question your ideas, no worries! It is very possible to do on the side! I might suggest considering a partnership, be it with loved ones, like minded friends, or like minded investors. As they say, strength in numbers, and that’s not only when it physically comes to needing to take action, it’s strength in numbers for peace of mind purposes.

I personally owned a 3 family on my own many years ago and being a landlord on my own had me overwhelmed to the point where I came home one day and says to my wife, that’s it! Fast forward 10 years and I regret selling that property because I’m now smart enough to realize I should have delegated the little things to the professionals because my time was more valuable that doing everything on my own, ex: raking leaves in December just in order to get them out to the street in bags in time for the city to pick up. I could have paid someone $75 to do that!

Now I have a partnership owning a 2 family with 2 others. It’s gone smoothly because we take turns, work together, delegate what we can’t do, and don’t panic. To me personally, it’s because I have faith in the partnership. I also own and self manage a vacation rental that is 700 miles away from my home but it’s only because I have a “team” there that communicates with me.

Now my next endeavor is looking to flip. I’m trying to convince my partners the value that could be produced but I’m also open to meeting halfway with a distressed property rehab to refinance out of to repeat and hold as a rental property. One if the things I need to study mire with the flipping concept is the tax implications. I large chunk of your profits are going towards short term capital gains. That’s worth a discussion with an accountant.

Keep studying here on BP and never be afraid to ask questions. And spend time with like minded people. It will alleviate your fears and uncertainties.

Good luck!