The Differences In Real Estate Investing, Flipping, And Fixing

They might all sound like the same thing, but real estate investing, flipping, and fixing are actually different. Using real estate to earn an income can be risky, but it also has the potential for incredible profitability. While all three methods can make money, that’s where the similarities end. Investors typically purchase a property and then rent it out with the help of a property management company.

Flipping is a system of buying and quickly reselling. Fixing involves buying a property for a low cost, improving it, and then selling it for a profit. This article provides a quick look into all three forms of real estate investing.

Real Estate Investing

People involved in this type of investment often purchase homes or other housing units, but with the intent of renting to create a steady monthly income. Usually with the help of a property management company, the main goal is rental income instead of a large sum payout received by selling. These investors may eventually sell a property, but the purpose of buying is to rent.

Flipping

Flipping is fast. An investor usually purchases a property and then turns around and sells it as soon as possible. Typically, a "flip" doesn’t require any repairs or improvements, although sometimes it may involve some minor cosmetic work. This kind of real estate investing doesn’t usually provide a constant income and many times a flipper already has a buyer in mind when they purchase a property.

As this involves large sums of profit, flippers are subject to high taxes. Most of these types of properties are quickly resold, but when a buyer can’t be immediately found, sometimes flippers make use of a property management company and opt to rent the property until they can sell it.

Fixers

Investors buy a property at a low price and then fix it up. This usually includes a total remodel that makes the property look like new, allowing the investor to get a higher selling price and a huge amount of profit when they buy right. Unlike flipping, businesses involved in fixers typically hold a property for a year while repairs are underway so they pay less taxes on the profit.

Many times, "fixers" live in a property during the renovation process, often doing most of the repairs themselves. The profit is usually used to buy the next property once the current one is sold, building on each other as the investor amasses a fortune when done right with the health of the real estate market taken into consideration. This type doesn’t usually involve renting or the services of a property management company unless there is difficulty selling the property.

Making huge sums of money fast is an intriguing idea for many people in need of additional income. Unfortunately, real estate investing is not for everyone. Professionals know what they’re doing and they have to make good decisions about which properties to buy. In addition, investors are often at the mercy of the up and down housing market.

Christine O’Kelly is a writer for the property management company, Beal Property LLC. Working closely with individuals involved in real estate investing, Beal Properties in Chicago has more than eighty years experience.

Article Source: ArticleSpan