BETTER: Renting Or Flipping? | Episode 98: What’s the better investment:  Rental Property or Flipping?  Well, the verdict is in from a major real estate data firm.  I’m Bryan Ellis.  I’ll tell you what that verdict is, and it’s relevance for you,...

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BETTER: Renting Or Flipping? | Episode 98: What’s the better investment:  Rental Property or Flipping?  Well, the verdict is in from a major real estate data firm.  I’m Bryan Ellis.  I’ll tell you what that verdict is, and it’s relevance for you,...

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What’s the better investment:  Rental Property or Flipping?  Well, the verdict is in from a major real estate data firm.  I’m Bryan Ellis.  I’ll tell you what that verdict is, and it’s relevance for you, RIGHT NOW in Episode #98…----------Ahhhh yes… it’s a classic conflict among investors…  Take a small bit of cash flow now and for years as a pacifier while you wait for big gains… or get in for the quick but substantial hit of profit by focusing on undervalued assets. Yes, my friends, it’s the constant debate of whether it’s smarter to RENT PROPERTY or to FLIP IT.  And our friends at CoreLogic have the answer, which is:  real estate FLIPPING is definitely winning the day versus rentals.And why wouldn’t that be true in today’s market?  Real estate prices in much of the country is still undergoing a rather substantial rebound from the market carnage of 2007-2009… frankly, it’s the perfect scenario for real estate flipping, as the market itself is doing much of the work of bringing a profit for flippers.Still, there’s more to the story.  This survey was conducted among investors purchasing real estate at auction… both in live auction settings and in online auctions.  And there were 3 different types of buyers identified in the survey:  One-time buyers, Real Estate Investors, and agents or representatives of investors.One-time buyers is the only group who preferred renting to flipping.  It’s easy to see why:  One-time buyers are inherently low-volume in terms of real estate transactions and frankly, it’s not plausible to be a flipper if you’re only doing it every now and then.  That particular method of profiting from real estate doesn’t lend itself well to the casual investor.But to those professionals and serious flippers… this market remains a truly stellar environment in which to generate rather substantial short-term profits.  I guess that’s why, among real estate investors and those who represent them at auctions, the Flip vs Rental option is won by the flippers by a differential that, if it was a presidential election, would be a landslide.There’s one large generalization that can be drawn from this study, and it is:The MORE PROPERTIES a person tends to buy in a year, the more likely they are to be real estate flippers rather than buy-and-hold investors.  In fact, people who buy zero or one property per year are more likely to be landlords by a factor of about 60 to 40.  But that ratio reverses almost exactly the very moment a person buys their second property.But overall, one thing is clear:  Flipping is where the most money is being deployed among savvy, active real estate investors… and by a very, very wide margin.Why?It’s simple – there’s a lot of money in flipping.  That’s not always the case.  Look… I have a team of flippers that does GREAT work and are able to make profits in good times and bad times but, the truth is, sometimes it’s just EASIER to make money as a flipper than it is at other times.  And right now – and I expect for at least another 2-3 years – flipping is in a real sweet spot.The best evidence of that is NOT the CoreLogic report, which is just a survey that people say what they “intend” to do.  The best evidence is the RealtyTrac report that analyzes quarterly real estate flipping activity.  That report shows what actually happened… not just intentions.  And that report shows some really amazing numbers:First, it showed that the average GROSS profit for real estate flips that closed in Q1 of this year was over $72,000.  Second, and just as importantly, it showed that the gross profit margin – sell price versus buy price – was over 35%.  That means that it wasn’t mega-mansions that led to $72,000 average gross profits, but houses in the $100,000-$300,000 range… a much more palatable scale for most investors.But all of that is nebulous and imprecise… the result of studies, and not specific deals.  So let’s look at some specific deals to see what’s REALLY going on out there.My Flip team closes 1-3 flips
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