Real estate investors gnaw on a bone of contention over how to approach investing. Some like to wholesale properties and let their concerns about risk scatter like paper before a hurricane. Other investors like to flip houses, fix and flip. It’s like a kiss from the gods to find an awesome deal. How does this investment strategy stack up to the alternatives?
Just as there were two kinds of mortgage lenders, or stock investors, so too there at least two kinds of real estate investors. Mortgage lenders either want to lend money and service that mortgage or they want to lend money, sell their asset, get their money back and write another mortgage. Some stock investors buy the stock of undervalued companies and hold those shares until they are fairly valued or overvalued. Other stock investors jump on the momentum of a stock and sell when the momentum starts to fade. That could be days, weeks, or months.
Real estate investors are either interested in rapid turnover making a little on each flip or are interested in rehabbing, bringing an improved house to the market, and making a happy homeowner’s dream come true. Another possibility is flipping (wholesaling) properties to other investors who are assembling packages of income producing rentals.
JD Esajian writes, “There is a huge demand for buy and hold income producing rental properties. Everyone can benefit from passive income producing real estate assets in their portfolio, but not everyone finds that it is the best fit for them or their goals. Flipping houses can produce large lump sums of cash while reducing risk and management. Get in, out, and paid. Some investors find this to the best fit for their skill set and personality, and someone needs to do it. It can also be less expensive and time-consuming to flip houses versus rehabbing and renting them out.
The most obvious answer is volume. Regular home buyers looking for a property to live in may only buy a property every five to ten years, versus a single investor client that may buy ten or more properties each month.
Flipping (Rehabbing) houses for regular retail buyers can be slower, more time consuming and expensive. However, it can facilitate reselling properties for top dollar, versus offering the substantial discounts that are needed to offer value and profit for other investors. Investors can even offer seller financing to move units faster while creating ongoing income streams, without the holding costs and risks of rentals.
There are many reasons for flipping (wholesaling) properties to other investors, just as there are many reasons to flip houses to retail buyers. You don’t have to concentrate on just one area. You can do both when conditions are ripe or depending on the economy at the time. Maybe this is the time to flip (wholesale) houses to investors and not take the risk of owning real estate. Or, maybe, this is the time with housing prices rising to want to hold housing assets. You have to decide. No one said investing was easy, but you have to find a strategy that fits your risk tolerance and goals.
As investors, we are in business to make a modest profit on any deal, however, we can help homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. Just the simple honest truth about your home and how we can help you sell it fast to resolve any situation.
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