Why should you consider a fix and flip strategy rather than rental investment?
Let's be clear, rental investment is just as important as fix and flip in a diversification strategy. Rental investment has many advantages, including stability. But today, we're going to see why fix and flip can be more advantageous in certain situations.?
First of all, the returns can be much higher! On a fix and flip, you can reach 25% return and more in only 3 months in the USA for example. Whereas to get 25% return with rental investment, it would take you 2 years if you do a very good operation. Your capital grows faster, allowing you to position yourself in larger projects faster than you might imagine.?
Secondly, the fact that you buy with the aim of reselling immediately once the work is finished, takes away the stress and the possibility of a vacancy or a non-payment from a tenant. Your profit is conditioned only on the fact that you buy at the right price, that the work estimates are perfectly done by professionals and that you resell at a price higher than your purchase price + renovation.?
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Thirdly, the rental in plan B. When we talk about fix and flip, people tend to talk about the risk of not being able to resell, or that the resale period takes months. This can be the case, it's true, that's why you need to surround yourself with professionals who analyze the rental potential, in order to benefit from rents while waiting for the resale. If you call on the professionals of fix and flip, with a team on site and a consequent list of buyers, it is not excluded that you already have a LOI from the buyer attesting that he already agrees to buy your property at a given price once the work is completed, this LOI is often accompanied by a deposit. This considerably reduces the risk when you decide to take a position on a property to be renovated.?
To summarize, the fix and flip strategy is for those who want to grow their capital quickly. If you want to position yourself on fix and flip operations in real estate, contact me.
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