Many investors these days are focused solely on flipping properties, which is buying properties and fixing them up for quick sale, as opposed to holding on to them for the long term. However, in many cases, holding onto a property for the long term will effectively generate greater wealth than if you flip the same property. You may want to think about holding on to some of your properties and flipping some of the others. However, you probably need to think about using a flipping strategy for quite awhile, before you are ready to begin holding a few.
The Benefits To Flipping
The greatest benefit to flipping a property is the immediate cash. For a lot of investors, the idea of being paid right away is too appealing to ignore. In fact, flipping properties sort of takes the real estate market out of the equation altogether. If you purchase a property wisely, no matter if the market is thriving or failing, the only thing that affects you is the length of time it will take you to resell your property.
The Benefits To Holding
Investors who choose to hold properties are successful with generating true wealth during the long term. In the past and still today, the value of property appreciates at a faster rate than inflation. If you purchase you investment properties in the right areas, your yearly appreciation could possibly make it into the double digits. Your investment properties can be used as collateral for loans to invest in more properties, or rented out to tenants to provide retirement income.
The important thing to determine is whether you would do better in the real estate market flipping or holding your investment properties. In order to decide, you need to think about future income, taxes, financial goals, etc. The majority of investors in the real estate market get started by flipping properties, and then they work gradually toward holding properties and managing rentals.
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Hi Sean,
There are benefits to both holding onto a property and flipping a property. I think it depends if you want the money quickly or if you want the solid returns over time.
I think a lot of this choice will come down to your personality and what your financial goals are. I think you could do both easily.
Getting a bankroll of cash going in the beginning of your real estate investing career by flipping properties does sound like a very alluring prospect. It is easy to see why investors would follow the pattern you have noted in the article.