Real Estate Investors

[WharfRat+]

What is the better way to invest/make money in real estate:

a) purchase rentals and keep them long term

or

b) buy fixerupers and flip them


I know there are a lot of variables, but I'm moving to an area that hasn't seen a housing boom as of yet (upstate NY) and want to get my feet wet in real estate.

I'm leaning towards option B as a few of my friends own rentals and they spend every Saturday fixing all of the little problems that arise. Plus my wife's dad is retired and is pretty knowledable about home repair so i'm thinking he woudl be a good asset if we decide to try option B.

I know the flipping boom has come and gone, but I'd still like to give it a shot.

Any advice?

 

[Anonymous1]

Option A will usually and generally turn a profit long term and is typically less risk on cashflow as tenants cover the cost of operation. I don't know the NY market at all, but you need to look at rents and determine market versus the actual rents of the property you are considering to buy...aka upside. Rent types, as well...Section 8, subsidized...rent control to name a few. Also, need to look at the expense side to see how they can be managed...maybe reduced, etc. Look at whats taking place with new rental property coming on line...its your competition. For comparison sake...use the capitalization rate, price per unit, per room and $/SF and the GRM to get a feel for where the property sits compared to the market.

Option B needs a market moving north to be successful. If you can't buy at least 35-55 percent below market, i.e., as is value versus as repaired, then you are in for headaches with little ROI. Always calculate holding cost and selling costs, as well. I don't have any idea how good your handyman is, but it can get very costly if you are unable to complete certain "fixer" items. Also, what market are the fixers, entry level, second home, vacation home, luxury..etc...you need to know which market your are dealing in, as well.

Option C is to rent out Option A investments. GL

 

[SSI]

do a combo of both as im sure you will find out........

set out to "flip them" but always have the rental aspect to fall back on......

biggest thing to remember and cheapseats touched on it........

your money is always made on the buy,,,,,,,,,, never on the sale........ dont forget that.......