Flipping vs. holding – which is better when investing in real estate? It depends upon many factors, the most important of which is your time horizon.
If money is needed right now, then flipping real estate is the best way to go. There is no waiting around to get your cash that has been invested in the property. Looking at the ups and downs of the real estate market really doesn’t matter.
Now if you have too much equity in your investment properties, that can be a huge disadvantage and hurt your investment and profit. A lot of people love to do this as a hobby. Once the inventory is gone, there are no ties to the business. Therefore, there is no pressure in having too many properties. But the money stops once you stop flipping. Additionally, there is no market appreciation in flipping.
If you buy property when the real estate market is soft, then it is best to hold it. When holding the property, it could increase in value. Buying soft could reap a huge profit when the market bounces back. This is especially true if you made improvements to the property.
Buying properties in the same neighborhood could really provide cash along with businesses in the same location. If you do your homework by researching everything, holding can be a cash cow. While waiting to sell, rent the properties to make money and not have to wait on money to come. If the properties are all paid for, then they can be passed down and inherited.
Just remember real estate is not liquid, so you must find a buyer for the property. You cannot sell the property if you are renting, as tenants might have a lease. If something has to be repaired, it may cost you out of pocket.
So there are many elements that go into the flipping vs. holding question when you are investing in real estate. Each has advantages and downsides.
For more timely and expert advice on real estate investing, call Larry Arth of Equity Builders Group at 941-718-7761.