In today's sometimes difficult real estate market home buyers as well as real estate investors are able to find really good deals looking at Bank Owned Properties. Their inventories are at record highs and many banks are looking to cut their losses and sell the property just to get it off of there books. Once you buy a bargain, you need to make the decision as to if you want to Rent it out or Flip (sell it once any improvements are made to the home) the property when finished. There are advantages to each.
Rent:
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- Spend less money redoing and updating the property realizing that renters may not take care of the property and you may have to redo part of it before selling it.
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- It takes less time to rent a home than it does to sell it.
(You do not have to wait 1-4 months until closing.)
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- You can mortgage the property to pull ~ 70% of the value out of the property, freeing up some of your cash for future investments.
- You can depreciate the house (tax advantage) and as the Real Estate values increase, your profit goes up.
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- You have a renter covering your expenses for the property.
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Flip:
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- You will likely spend more on the renovation initially as you want the house to look wonderful and professionally done for the potential buyer.
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- You will free up all of your cash in your initial investment as well as your profit.?(Many savvy home flippers can move a home from point of purchase to point of sale in 3 to 4 months).
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- You can buy another property with the cash from #2 allowing you do make more profit initially.
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- You do not have the risk of a renter damaging the property.
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- Once you sell the property, you liability is limited (similar to liability you would have after you sell any home).
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Which ever you choose, you can make money in real estate investment no mater what the over all market is like. It just takes planing and knowing when to call in the services of experts in various fields, including REALTORS
