Property Flip or Buy To Let
Which is the better for me as an Investor?
With investors making a beeline in the housing market, most want to capitalise on hottest trends without much comprehension of the fluctuations and speculation rife in the sector. With a gradual upswing in the UK property market many property flippers or opportunity buyers are earning a lot of money by purchasing distressed property that is refurbished and then sold. This is a narrow short term goal that helps you increase your net worth. However a common question asked to our team is; ‘is there a viable method for all investors?
The main difference between flipping and renting is in the same zone as investing versus speculation. If investing is the act of committing capital to a property or a project with a long term goal, then speculation is all about engaging in risky transactions with the aim of profiting from fluctuations in the market value of a tradable good. Flipping properties will help you reap profits now but the fact remains that this is a business aim that won’t reward you in the long run. When you rent, you show your intent as a long term player who wants stronger capital gains with dividends and rent income. Unless you are looking to start a speculative career in properties, it makes good business sense to stay in for the long haul and rent properties.
As an investor, flipping, by obtaining below market value property and then renovating will help you get rid of long term headaches of maintaining a property in the coming years. You also have a lot of spare time to look into other real estate refurbishment projects and invest in other financial instruments.
Rental property is often considered the long term investment option and as an investor, you can draw a steady income every month irrespective of all ups and downs in the real estate market. It makes sense for investors to speak with accountants for tax advice on property related investments. Either flipping or a buy to let investment option has its share of ups and downs.
Flipping can be a daunting task when you don’t actually know the steps of what you are doing and soon realise that the spare refurbishment cash is gone. While your pockets are dry, renting a property may just about suck up all your spare cash! It may also be a difficult job to find rentals that achieve the best yield. That’s why you need to speak with experts to know which type of investment actually suits you.
Nevertheless, you can generate income by simply flipping multiple properties in the short term. If you achieve a greater passive income you may just be in line with your goal of financial independence!
Your Best Choice
There is no single prescription for any investor. Many investors find rental properties a lot easier to handle as a first or second investment. The best advice is to evaluate the financial situation and determine what the financial strategy would be in the short and long term. Being wise about investment choices helps you better navigate the property market.
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