Author Topic: Rent or Flip?  (Read 1523 times)

Jules13

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Rent or Flip?
« on: April 14, 2014, 01:22:18 PM »
Which do you prefer and why?  I am assuming because rentals provide cashflow, but then wouldn't money from flips also do this...eventually in the form of the 4% rule?  Seems like flips would be far less hassle. 

Thanks.

arebelspy

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Re: Rent or Flip?
« Reply #1 on: April 14, 2014, 01:47:47 PM »
Which do you prefer and why?  I am assuming because rentals provide cashflow, but then wouldn't money from flips also do this...eventually in the form of the 4% rule?  Seems like flips would be far less hassle. 

Thanks.

Flip income is transactional - you get paid when you do a flip.  You can invest those proceeds in something else (say, stocks) to turn that profit into passive income.

Rental income is passive (to what extend it's passive versus active depends on a number of factors).  The rent checks roll in every month.

Flips are a lot of work, and a lot of risk.  They're a business.  Rentals are a business, but a much simpler one taking much less time.  Flips can make a lot more money, but again, when you stop flipping, the paychecks stop coming in.

They are two totally different things.  Many have argued that flipping isn't really investing, even.

Hope that helps clear some stuff up.  :)
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tryan

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Re: Rent or Flip?
« Reply #2 on: April 15, 2014, 01:25:09 PM »
Don't forget the tax benefit to holding for a year.  Better to rent it for year - or two -  be taxed as long term gain.

Last flip I sold was hammered as a short term gain ... ouch!

Jules13

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Re: Rent or Flip?
« Reply #3 on: April 15, 2014, 01:36:03 PM »
Thanks...will keep all that in mind.  Hadn't thought of capital gains.  Good point.