Are you thinking about investing money in real estate to earn more income? If so, you will need to decide if you want to purchase rental properties or homes to flip. You can also choose both. You should know the differences between these options before you begin investing in them. Here are some of the primary differences to understand.
Long-Term vs. Short-Term Income
One difference between investing in rental properties and house flips is the way you earn money from the real estate properties. With rental properties, you invest in real estate to earn long-term income. You might not make any money on the properties for the first ten years or so, but you can earn a lot after that. When you invest in house flips, you can earn a profit within months. If you want short-term income, choose house flips. If you want long-term income, choose rental properties. You can also buy a combination of both to have both income types.
Financing Differences
The second difference to know is the financing you need for each type. If you want to invest in rental properties, you must tie up your money for a long time. You will need money down on the purchase, and you might not be able to borrow any additional money while you own the property. Financing a house to flip is not always easy to do, but it only ties up your funds for a few months. If you can finance a house flip project and sell the house within six months, you will have no money tied up in the investment. Instead, you will have all your money back plus a profit on the sale.
The Duties You Have with Each
The last difference to consider is the difference of duties. If you purchase rental properties, you will be a landlord to the tenants who live there. You will have to answer their questions, deal with their issues, and collect their rental payments. If you flip homes, you will have the duties of renovating the properties, but that is the only responsibility you will have.
These are three differences between buying rental real estate properties and houses to flip. If you are interested in purchasing any type of real estate, talk to an agent. Real estate agents help people buy residential properties, commercial properties, and investment properties. You can call one today to get started searching for the right real estate to purchase.
