We’ve all seen the TV shows giving us a glimpse into making money by flipping houses. They make it seem easy, right? These investors generally buy a cheap house, put some money, hard work and TLC into it and sell it for a large return on their investment. With the popularity of these shows, no wonder it is such a new and exciting playground for investors of all sizes, but is it really a good decision to fix and flip the property, or should you buy and hold it?
Buy and Hold Real Estate Investing
The other side to flipping houses is buy and hold real estate investing. The strategy here is to allow the investment to grow over time and create a continuous stream of a monthly income and positive cash flow. Real estate values will usually increase with time due to a constant increase of demand for rental houses.
Compared to flipping houses, holding onto your real estate investment allows your property to appreciate in value while collecting monthly income for longer periods of time, whereas flipping a house is usually done rather quickly and the price of the sale will depend on the market status at the time. This means the price of the sale may not be the best, but the best at that time.
Buy and hold real estate investing also allows someone else to contribute payments to your mortgage and creates an equity buildup if you’re able to find a quality tenant. Unless the mortgage is an interest-only note, each payment made decreases the amount of the principal of the note and you are closer to owning your property clear and free.
Investors and developers have a decision to make when it comes to flip and fix or buy and hold. These are just a few of the benefits and factors to consider when looking into your next investment opportunity.
At Patch of Land, we connect real estate developers looking for funding with online real estate investors who want to diversify their portfolio via crowdfinancing, or P2P Lending. If you're thinking about fixing and flipping or buying and holding let Patch of Land fund your next project! Connect with us today to learn more.
This entry was originally published on March 16, 2015.