Investing in real estate can take two forms which you can put to use to make money. You can choose to buy the property and increasing its market value by corrective activities and selling it to a buyer at a higher price to gain profit, a concept known as flipping. The other choice is renting out the property once you purchase it to get long term returns in the form of rent payments, a concept called but-to-let.
There is a huge tussle of opinions on which of the two options is the best money making idea in the real estate market. There is never an real answer as to which of the two is better and below are the features and drawbacks of each so that you may do the picking. There is a false assumption that real estate only involves flipping property. What happens here is that you get the returns of your investment in a very short time compared to the later.
As stated in the description, you can opt to buy a property that has room for improvements which you will do and sell the property at a higher price all in less than a year. It comes with a feeling that your investment is worthless because you don’t have to wait long to get the fruits of your investment because investment is believed by most people to only realize long term goals. The downside of property flipping is it has an easy lay out but very hard to realize.
It may seem quite easy on paper but the obstacles on the practical market are proving it very hard to realize. Finding and buying the property that is both well priced and has plenty of room for improvement may be difficult making flipping harder than it may seem. The next step is doing calculations just to be sure you do not spend too much money on the improvements and at the same time making certain you gain some profit from it. The final step is looking for the right buyers because most individuals prefer renting property rather than buying.
Buying and renting out property has reigned as the more popular of the two. Due to its long term basis, renting out property has gained popularity among people. The owner of the property may choose to rent the property for a period of time before flipping it later on. Commercial investors realty commonly opt for this because they only need to relax and await payment of rent.
The drawback of renting out property is that profit is only seen at a far much later date. Providing good living and working conditions for your tenants is paramount and may prove to be expensive. The property owner may lose income in the form of rent when the tenants leave the property and for the period taken to find another tenant.
None of the ways seem better than the other but you should chose only the one that is tailored best to suit your needs.