Are you thinking about investing in real estate? Finding the right property is only half the battle. From there, you’ll have to decide what to do with the home. Do you want to rent it out as a second income? Or maybe you want to wholesale it (sell it to someone else immediately without making improvements for a small profit). Your final option is to fix up the property and resell it with the upgrades for a healthy windfall.
If you’re considering holding the property, we have a suggestion: Don’t. Here are 4 advantages of flipping over holding in Sacramento.
Flipping Over Holding — Advantage #1
The first advantage of flipping over holding is the quick income. It may only take a matter of weeks or months to make the necessary renovations to a property. If you’re in a hot market and the property sells fast, you could have your profit in hand within two or three months!
This is a huge advantage to holding the property as a rental because don’t have to deal with maintenance and upkeep. Plus, you’ll get a full return on your investment within weeks instead of having to wait years for incoming rent to pay for the initial cost.
Flipping Over Holding — Advantage #2
The second advantage to flipping over holding is that you don’t have to deal with tenants. Investors who buy and hold real estate usually rent it out to tenants… and tenants come with problems! They don’t pay on time, they forgot to pay, they damage the property, and they sneak out in the middle of the night.
But with flipping, you’re only dealing with wood, nails, and drywall. These are things you control and you don’t have to worry about whether the tenant is going to steal from you.
Flipping Over Holding — Advantage #3
One of our favorite reasons for preferring flipping over holding is your ability to influence the selling price (and therefore your return). Rental income can be limiting, because you can’t charge more than a tenant is willing to pay and what the local market will bear. (And some areas of the country are even rent-controlled.)
With flipping, you can knock down a wall or paint the walls or build a fence or add plants… and all to increase the value. And the best part is: the more you do, the more you can typically increase the value.
Flipping Over Holding — Advantage #4
Our other favorite reason for preferring flips over holding is the large sum of potential income. A rental property may only bring in a thousand dollars or so each month. You will eventually get your entire financial investment back, but in the meantime you only get a small trickle of cash flow month after month.
With flipping (assuming you’ve bought low and sold high) you can make thousands of dollars at once.
Summary
If you’re debating about whether you should flip or hold, there are advantages and disadvantages to each. But these 4 advantages of flipping over holding in Sacramento give you a compelling reason to seriously look at flipping as an option for you.