What to Choose Between Property Flipping and Buy-to-Let.
There are always two ways you can use to make money when investing in real estate. One of the two options is flipping the property which means that you engage in activities to raise its value and later sale it out at a reasonable profit. The second option is the concept of Buy-to-Let which simply means that after purchasing a property, you go ahead to rent it to tenants.
The real estate world is experiencing heated arguments on which of the two is the better option. None outweighs the other by far and therefore both are applicable and for this reason I have outlined below the best and bad sides of the two that you may do the picking. More often than not, people relate property flipping to real estate investments but it is not the only one. 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. Because of the widespread belief that an investment should only realize profits after a long period of time and flipping brings the feeling that your investment was not worth it. The main disadvantage is that it may seem easy in its plan but it is practically very hard.
The plan on paper seems easy because it does not take to account the obstacles in the real life situation making it even 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. Doubling between not overspending on the improvements and making sure you gain a profit may be a hard task to accomplish by evaluating the cost of every improvement you make. Because most people prefer to rent property due to the high finances required to buy property, it may be very hard to find a buyer for your property.
The concept of Buy-to-Let has been around for centuries as the more popular of the two choices. The reason for this is that renting property guarantees a long term in stream of money in the form of rent over a long period of time. The owner of the property may choose to rent the property for a period of time before flipping it later on. It is preferred also by commercial real estate investors because you do not need to engage in any activity like improvement but rather receive money while relaxed.
The profit is usually realized after years of renting out the property which acts as a disadvantage. Your tenants will expect you to ensure their living and working conditions are optimum, it may be costly to realize this. 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.
Both ways are awesome ways of making money and your choice should be aligned with your own personal requirements.