Flipping vs Renting: Risk And Reward
Flip vs Rent: Risk And Reward
One of the most popular real estate investment processes has been the fix and flip. Many people made a lot of money this decade flipping houses. However, fix and hold has recently come back into the picture due to low prices, hard to get financing, and long term prospects. Generating a cash flow from property that was purchased at a discounted price can be much easier when you decide to rent or lease that property out.
However, there can also be serious consequences when given the wrong approach. You must consider what sort of repairs are necessary, how the rental market fairs in your area, insurance rates, and much more. Determining the best rental deals on your own can be challenging. But now, you can have the most successful tools in the market to help you determine the best opportunities for a positive cash flow. It is now easier than ever to over-pay for a fix and flip, or to not see a great fix and hold deal. Therefore, the biggest challenge for the modern real estate investor is to construct correct offers that account for the correct exit strategy.
For example, if a fix and flip deal is being considered, a net profit is the place to start. After that we move on to accurately account for all of the factors involved in a deal. So we start with a profit and end up with an offer (one that could include an assignment fee, if wholesaling). We also need to keep in mind the relative amount of the cost of the fix, compared to the amount of the After Repair Value.
For another example, if a fix and hold deal is being considered; prevailing rental rates, loan rates and terms, and vacancy factors are the main considerations. After that we move on to accurately account for all of the factors involved in a deal. So we start with a profit and end up with an offer (one that could include an assignment fee, if wholesaling).
After years of doing these calculations by hand, my partner and I have developed an online real estate offering system to make our lives much easier. We can now crank out offers and determine the exit strategy in seconds.
To Your Success, Tom & Svein
About the Author
Go to http://www.What2Offer.com to learn how to crank out real estate offers in seconds. Instantly know if a deal is for you, whether you're a wholesaler, rehabber, keeper, or assigner. Why waste time making iffy offers on properties using stone-age techniques, whereby now you can use a simple 21st-century Web-based program?
Easily make accurate RE offers in seconds-no kidding. Easily determine your exit strategy (flip, rent, or assign) before you make your offer. Easily determine what interest rate you'll need on your cash flow (rental) deals. Easily determine what the detailed repair costs will be-for your geographic area. Easily determine your cash-on-cash return.
Tell others about
this page:
Comments? Questions? Email Here