If you are at the point of investing in a property that is not your primary residence, then you’re in a very good position to see a serious return. There is a lot of things to get right, but so many options at the same time.
One of the major ones is what type of investment you are going to make. Two types come especially recommended – flipping a property and renting a property.
In the context of property investment, flipping means purchasing a property with the intention of renovating it extensively and then selling it on. Renting refers to purchasing property in order to rent it out to tenants or vacationers. Both can see a serious return if you go about things right.
Salt Lake invoice factoring service Thales Financial say that making sure you can actually afford to flip can be a tricky business, specifically because the extent of work to be done can be difficult to calculate at the outset when there is simply so much to be done. In this particular area, renting might be easier.
However, there is a degree of overlap between these two options. You can purchase a property with the intention of flipping it, renovate it and make it a superb vacation home. At that point though, you might decide to rent it out instead of selling it on. While not technically flipping, there are elements of the process in this type of rental investment too.
The Importance of Location
Before going on to the relative benefits of these two types of investments, it is worth making one particularly important point first. Location is essential. The property can be amazing, but the location needs to be too. People go on vacation to places, not to stay in specific property.
As long as you know this from the off and purchase in a popular vacation area, both flipping and renting can be viable options. There is indeed a type of vacation home that suits a certain location best (and that might help direct what kind of renovation you make) but the process all starts with selecting the right location.
Flipping Versus Renting
Here follows some relative advantages of both flipping and renting. Bear in mind, however, that there will always be many more factors at play in your decision.
Advantages of Flipping
Large Cash Payout
Specifically, once you have renovated the home and put it back on the market for a higher value, you will be looking at a single profit return once it is sold. After that, it is no longer your problem. Flipping is for a one-off large profit payment.
You Can Direct the Style
Much will depend upon the property you are renovating but, depending on how much work you actually do, you can really tailor the style to suit the location and thereby give yourself the best chance of making a sale.
Advantages of Renting
Generate Income over a Longer Time Period
When you purchase a property and rent it out, you can expect not to make much money – or even break even – for some time. Nevertheless, you will avail yourself of a steady income stream, especially if the property is in a consistently popular location.
Capitalize On an Already Popular Property
Sometimes, you can purchase a property that is already being rented. You simply take over ownership and the rent starts going to you. In this way, renting can be much less work than flipping.
Whatever you decide to go for, be sure you are investing in a suitable location and that you will eventually have an attractive property on your hands.