One of the first decisions many single-family Mint Hill real estate investors make is: flipping or renting? While house-flipping does accompany a few advantages, the majority of the house flippers also encounter major risks and often make huge sacrifices to get the property ready to sell. In contrast, buying properties to rent can become one of the greatest strategies to grow real wealth without the risk or sacrifice of flipping – if it is implemented correctly. Let’s look at the pros and cons of both to properly comprehend why rentals are a better investment than house flipping.
Flipping: The Pros and Cons
For several people, flipping houses is a big investment of money and time. The potential for a huge, one-time payoff is one factor why house flipping draws so many investors. And there are a few successful house flippers who have earned money.
But that anticipated payoff carries a high set of risks, beginning with having your money tied up in a flip for as long as it takes to renovate and sell it. You only earn money after finding, buying, remodeling, and then reselling the property. For several investors, that implies your income is limited to the number of flips you can do in a year.
Flipping is also naturally volatile, with several potential risks that can quickly eat into your profits. For example, there’s no guarantee that the bargain property you obtained will appreciate or be worth as much as you anticipated once it’s ready to sell. Your income is completely at the mercy of fluctuations in the real estate market. Rising costs of materials, a shortage of qualified service providers, or unethical or dishonest contractors, together with any number of other issues, your renovations may become more expensive, lowering your potential payoff in the end.
Zillow: A Case Study
For a high-profile example of flipping gone wrong, consider the story of Zillow. The corporation decided to jump into the house flipping game by proposing to buy up homes for sale and then turning around and selling them at a profit. At least, that was the original goal. The issue is that Zillow could not sell many of the purchased properties, leaving them with 7,000+ homes now worth less than what they paid for them. It’s every flippers nightmare – on an enormous scale.
Investing in Single-Family Rentals
It is advisable to invest in rental real estate to prevent risk while growing wealth. Single-family rental homes have proven time and time again to be one of the easiest ways to real, long-term profitability. There are a number of major reasons behind this.
First, one of the most significant benefits of investing in rental homes is the ability to obtain short-term cash flows while growing your property values. As your properties appreciate, the expenditure when you sell keeps pace with inflation over the years.
There are very few investments that can offer the same! Rental properties are mostly stable in difficult economic circumstances, allowing single-family rental property owners to sustain a consistent monthly income. In addition, there are several tax benefits to owning rental properties, which may add up to significant savings over time.
Perhaps the most significant reason some investors avoid single-family rental homes is because of the management they necessitate. Even though owning rental homes normally takes less time and effort than flipping houses, rental homes still require active management to stay profitable.
The good news is that, if done in the right way, you can streamline your investment properties and reduce the amount of time they will require of you. When you engage with a quality Mint Hill property management company, you can move most day-to-day tasks off your calendar, leaving you free to focus on growing your investment portfolio.
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