Fix and Flip or Invest and Rent?

To flip or to rent, that is the question.  As a real estate investor, it's probably something you may be asking yourself. Flipping real estate allows for fast cash, whereas rental properties provide long-term income. Both are enticing, but if you’re looking to put all your eggs into one real estate basket, your decision will depend on your goals.  As you consider both, here are three benefits to each option: Reasons to Fix and Flip

  1. Flipping is a business, not an investment. Though it comes with many moving parts that require a lot of work and attention, you will find a higher of rewards — money —. They are also much quicker than those of renting.
  2. No ‘Long-Term’ Strings Attached. It’s no secret that not all real estate is created equal. Neither are tenants. If you are not wanting to deal with the major headaches that come with constant maintenance or less than desirable tenants, then fixing and selling the property is a way to avoid those long-term issues.
  3. Spare Time Filler. If you’ve got spare time, flipping is a lucrative way to spend it. You probably won’t even need to hire project management help if you can stick to just a few flips at a time, meaning more of the profit money can stay in your pocket. 

  Reasons to Invest and Rent 

  1. Easier to Manage. If you already have a job and are just wanting some extra income, rental properties are the way to go. From a workload stance, they are much easier and take significantly less time to manage compared to flips.
  2. Passive Income. Rental properties are passive income. If you were to lose your regular job, you’d still have money coming in from your rentals. For many, this security wins every time. Having passive income can eventually allow you to be financially independent and retire early.

Tax Incentive. Because rental property is taxed as investment income, which is significantly lower than flipping income, there are several tax write-offs as well. One write off is depreciation, which can save thousands of dollars in taxes each year.