Don't Flip This House – Milk It

House flipping is all the rage in America these days, but what explains the buzz?

The promise of a fat profit is the biggest draw, of course, and many people also seem to take pleasure in making a beautiful home out of a neglected foreclosure. Then there are the reality shows that make flipping look so easy and so glamorous.
Remember, every investor secretly believes they’re just as good as Donald Trump, just with better hair. But whatever the reason, there’s no denying the popularity of house flipping. That’s why many investors are surprised to learn that a buy and hold strategy could be a better fit for their investment goals – and especially now.
While renting out a property has always been a solid way to create a stream of passive income, current market conditions are making quite a case for a buy and hold strategy, at least for a little while. So what’s the argument?

Passive Income Is Your Ticket to Financial Freedom

You know what’s even better than earning extra income this month? Earning extra income every month.
It’s true that flipping a property can be a great way to turn a quick profit, but you make that profit just once per property. If you’re tied up with rehabbing or waiting for a buyer, it can be months before you see a return on your investment – plus, there’s no way to forecast what your exact sale price will be. That’s a lot of risk.
A buy and hold strategy provides a safer option because, when you turn your property into a rental, you’re creating a steady stream of predictable passive income.
Imagine what it’d be like to have thousands of additional dollars flowing into your bank account every month. With all of that extra income, you might even be able to convince your spouse to let you purchase that boat you’ve always wanted. Well, it’s worth a shot, anyway.

A Huge Pool of Renters Entering the Market

The current real estate market is flooded with foreclosures. You already know that, but what you may not realize is that the people who previously owned those foreclosures are now in a need-to-rent situation.
These families are either unable to afford a property of their own or they’re struggling to secure mortgage approval. As a result, they’re in the market for quality rental homes.

Passive Income Is Key to Financial Freedom

What does this mean for you? For one thing, you can expect lower vacancy rates. You’ll also benefit from increased average rental fees, resulting in even more passive income every month.
The American dream is still all about that green lawn and white picket fence, but until the economy improves, most families are putting that dream on hold. Renting isn’t ideal for them, but the situation does have a silver lining for savvy investors like you.

Rent Now, Sell Later, and Profit Twice

You know that old investment adage, “buy low, sell high”? It may be a cliché, but that doesn’t make it any less true. Right now, foreclosures are dirt cheap, but they won’t stay that way forever. Investors who buy now with a long-term commitment in mind can take advantage of current rental rates today and sell their properties in the future after the market turns.
It will take some time for the economy to recover, but the great thing about turn-key rentals is that they earn you money in the meantime. With the financial support that passive income provides, there’s no need to rush a sale. You can keep that property in your pocket and watch its value grow.
Then you can cash in on your investment at the perfect time, maximizing your profits. It really is a win-win situation – you’ll profit both today and tomorrow.
There are plenty of profitable real estate investment strategies out there, but how successful you are in your endeavors has a lot to do with finding the right system for you.
If the fast-paced world of house flipping excites you, then go for it. You can make a profit. But if you’d rather create a steady stream of secure passive income, a buy and hold strategy could be a better fit. Even if you’ve always been a “flipper,” current market conditions might just cause you to rethink your approach.
Are you an investor who has recently crossed over into buy and hold territory? Tell us about it in a comment below!


By Ben Yonge

Ben Yonge is president and founder of EquityPro, where he helps investors improve their livelihoods and plan for retirement income through real estate. Since 2004, Ben has helped thousands of investors and property owners build for their future. Ever since first grade when Ben asked his mom if they could make candy in their kitchen and sell it door-to-door, he knew he had a passion for business. Combined with a belief that the best deals benefit everyone involved, Ben focuses his energy on leading his team to these high standards at EquityPro. Delivering high returns isn’t the only outcome Ben enjoys. Helping homeowners who need to sell their home quickly and improving neighborhoods by renovating distressed properties bring a great deal of personal satisfaction. Ben’s focus at home is no different. Together with his wife he spends his time showing his two young children that anything is possible when you have a strong work ethic, stay true to yourself, and care about the people you work with.