First of all, I don’t actually consider myself a “house flipper.” I am a real estate investor. House flipping has become a buzzword lately due to popular tv shows that glamorize and dumb down the process for the 30-minute time slots they have. What you see on tv – that is not what I do.
Today, I want to talk about the differences between house flipping and real estate investing so that if you are interested in getting into the real estate market, you can make the right decision for your goals.
What is House Flipping?
House flipping involves 3 steps:
1. Buy a house at a discounted price
2. Fix it up, or “flip” it
3. Sell the house
Seems simple, right?
Well, as with most things in life, it is easier said than done.
Because of popular tv shows, house flipping seems like a miracle income source. What they can’t show you in the 30 minutes they are on air is the hard work and uncertainty of your ROI.
The process of house flipping needs to be quick, from 100-150 days, in order to get the most bang for your buck. Otherwise, you have monthly bills to pay on it that will add up.
With house flipping, you don’t have to worry so much about market fluctuation, but you will also be constantly buying, flipping, and selling in order to make your money.
Costs are high with house flipping and there are different taxes for short-term investments. We can help you learn about the legal side of real estate investments, but you do need to keep higher taxes in mind when you are planning your profit margins.
Also, with the quick turn-around, you might just break even or worse – lose money from your sale. It is important to work with real estate investment companies who have a lot of experience so that you don’t make newbie mistakes. While I don’t consider myself a “house flipper,” I do know a lot about realistic real estate investing and how to make sure you make a profit no matter what your investment is.
Long-Term Real Estate Investments
This process involves very similar steps but the process is adjusted to be more sustainable.
1. Buy a house or other residential property
2. Make any repairs and remodels necessary
3. Hold on to the property and rent it out until the value goes up enough for you to sell.
In this situation, you don’t have to sell immediately because you are renting the space and earning enough income to pay your monthly costs – and if you do it right, you’ll make a profit from their rent, too. The steady income of long-term real estate investing is much more sustainable for some investors.
As the price value of the property goes up, you are then able to sell the renovated property at a profit.
Real estate investment results in wealth, rather than quick cash gained from house flipping.
According to BiggerPockets.com, “Some of the wealthiest individuals in the world amassed their great fortunes through buy-and-hold real estate investing.”
I don’t know about you, but I like the sound of that!
Become One of the Wealthiest Individuals
If you are ready to take the plunge with real estate investing and don’t know where to start, give me a call! I can help guide you through one of the best decisions you’ll ever make.