Anyone flip vs buy/hold just due to personal preference?

Question

Hi all, I've been more of a rehab then hold investor and own rental properties. I've hired property managers but not all have been good. I'm starting to think I'd prefer to flip properties, that way you don't have to deal with property managers or tenants. Not that flipping is easier, just might be a preference of mine. I'm considering trying a flip instead for my next deal.

Does anyone flip properties vs rent because of personal preference to not deal with the longer term issues of tenants and/or management? I realize market conditions play a hand to some extent over personal preference.

Thanks!

Does anyone flip properties vs rent because of personal preference to not deal with the longer term issues of tenants and/or management? I realize market conditions  play a hand to some extent over personal preference.

Thanks!

Michael Woodward · Answer

I find it fascinating that the replies to this post have pretty much split 50/50 for flip and buy/hold.  The trend here appears to be that most people are having some trouble/frustrations with whatever strategy they're using and are looking to break into a different strategy to eliminate their current problems. From a big picture view, it looks like a "grass is greener on the other side" scenario that's playing out.

Both strategies have big challenges and their own unique headaches so it's easy to get sick of your current problems and quickly decide to change course.

My advice would be to work hard to solve the problems and frustrations that are part of your current strategy before switching to different one. It will likely be a lot easier to solve your familiar problems than it would be to have to confront a whole new set of unfamiliar ones.......my two cents....

Anthony Dadlani · Answer

I would have to agree with Amie D. CK Hwang.

Flipping provides a higher annualized yield versus buy/rent on the same dollar invested. ( Not accounting for leverage). However, flipping is an active business , both wholesaling and rehabbing.

Its good to have a mix of passive and active income for both long term and immediate needs.

I am partial to flipping in the near term, but also strategically building out the long term portfolio as well.

Rich Weese · Answer

I like the posts in this thread. Good cross section of thoughts and reasoning. I've done both and they are SSSOOOOOOO different. Time is a big factor to me. When I was younger or when I had extra time and market was conducive to flips, I did a lot. Profits were ridiculous in the So Tx area, financing was easy and investors were hungry. All those things have now changed somewhat. Margins are smaller, properties harder to find and investors choosing other ways to spend extra funds.
      I determined that I could do better in new const than flipping and hire that out, so little time involvement. I also have managed to "buy and hold" a good chunk of RE that affords mgrs. and a personal asst that oversees the mgrs. Owning property is still a pain in the rear sometimes, but having residual income each month is great fun. I agree mgmt. companies can be a pain, but I've posted on here before how I handled that in 4 different states and 5 different areas. Rich

Wade G. · Answer

I use to believe that holding was the only way to go for true wealth.  I am not so sure about that anymore.  Buy and hold has proven to be diminishing returns for me over time especially over the last five years of no appreciation.  Insurance increases alone has outpaced the rate at which I can raise rents.  Over the course of the last year my strategy has changed to flipping.  Where to put the gains from flips for future passive income I do not know anymore.

Elizabeth Colegrove · Answer

We do buy and hold because we are able to use financing versus straight cash.

Jeff Barnes · Answer

My favorite way to deal with long term properties has always been the lease option.  You get the opportunity to put someone in the property for a higher down payment, and usually a higher monthly rental amount as well.

I've had very few actually close on the sale of the property because they grow out of the house. The biggest downside is that they know the deposit is non-refundable, so the would-be buyers make very little attempt to clean up upon leaving.  However, none of my lease-option tenants were in the property less than three years, so I was able to recoup the costs over time.

Additionally, I used a note-servicer rather than a property manager since there was "supposed" to be an incentive for the buyer to keep up the property, which they did for the most part.

For anyone in this or any business, I suggest a long term strategy of making it a true business, rather than just a hobby.  This way you can become the manager/owner rather than the day to day operator.  Learn the basics of growing the business rather than growing a job, and you'll be set for life!

Nuhan Demirkan · Answer

Aime,
I actually prefer being a landlord for the recurring income stream. But sooner or later you run out of money. I thought about rehab to retail but found wholesaling to be more efficient. I manage my own properties without any hassle. The secret is in the screening. If you can be patient you'll find great tenants.

CK Hwang · Answer

Hi Amie, I am one of those investors who personally prefer to flip over doing rentals for the reason being that the income potential is far higher and not having to deal with tenants. That being said, I am currently in escrow for a property that i plan on keeping as a rental for the next 2 years or so.

The reason I am keeping a rental despite my preference for flipping is due to the fact that by having some passive income flowing in, it's easier for me to keep a rational head when identifying deals since i am depending on flipping and doing deals as a full time job and sole source of income.

Without some source of income, I get antsy when I haven't flipped or done or deal after a long period, increasing my chances of making a mistake.

Also, I have found that while some deals don't work as a flip, some work really well as a buy hold for awhile and then sell, so why limit myself.

Rental income is also a good way to create cash flow in order to get more and better loans for my flips.

So that's why even though I prefer flipping I have diverged my business plan to include rentals.... for now.

Mary B. · Answer

I think most investors niche in the market revolves around personal preference. Wholesaling and rehab deals are most certainly mine rather than buying and holding.

Residual income is something we'll have to indulge as investors if we're in it for the long haul(plan to retire in this business especially if retiring is a decade or more away). Good property managers are hard to come by and not just in my immediate market. I've conferred with other investors around the country that have stated the same. So thats a concern that I'll need to focus on when adding residual income to the mix. Commercial investments is a definite must for me... Yet its something in my business plan down the line as in at least 3years.

Kudos,
Mary

Warren Sterling · Answer

Hi Amie,

I like the idea of doing both but have found every time I have wanted to do a flip the rehab cost take me beyond my abilities and I have not found a partner to make our dreams come true.

I have found that buy and hold for passive income has worked best for me. I do use a property manager and yes the key is to find a good one.

Just look at every opportunity!

Anyone flip vs buy/hold just due to personal preference?

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