What Is the Best Real Estate Investing Strategy? Flipping or Buy and Hold?

California real estate investors, like others in the country, are always seeking a profitable real estate opportunity despite the depressed housing market. Compared to flipping and other short term strategies, the “buy and hold” investing plan for rental properties has made a lot of money for investors in the past, and is therefore worth considering. Property is purchased at below market value, held until housing conditions improve, and then sold at a profit. There are however, a number of factors to keep in mind before undertaking this strategy.

Investors who wish to have cash flow income while growing there wealth should acquire buy and hold rental property, one of the many advantages of this investment strategy is the option of using equity already accumulated in their portfolio to finance future purchases, and ultimately selling the held real estate when the market improves. Flipping on the other hand is common among investors when making money from stocks and bonds is very difficult or impossible, and they are looking for capital gains in the short term. An opportune time to buy and hold rental property is when housing prices are down, and are expected to eventually rise in value. If there is a real estate boom there is little chance that a property would increase in value, but rather the opposite, and you don’t want to get stuck with a property to which you are indebted to more than the property is worth. The fact that there are so many properties in foreclosure can be a golden opportunity for the real investor. If you can find one that needs improvement, an additional profit will be there when conditions improve. The housing market now is where investors need it to be, and with careful planning, and creative real estate investing, investors can capitalize on these perhaps once in a life time conditions.

It is very important when going into a buy and hold transaction that you have decided on how long you wish to keep the property. No one has a crystal ball to ascertain when prices will increase, but real estate prices usually cycle very ten years or so. You can closely watch real estate prices to see what is happening, and make your move to sell when it is advantageous. The risk of a loss should be a prime consideration, and so it is vital you stay alert as to what is happening in the real estate market. Because of unemployment and the current economy, just remember with rental property you probably would be unable to raise the rents in order to increase your income, and this should be a prime factor in your decisions. When prices of properties increase, don’t be tempted to hang on to your rental property longer than common sense dictates in order to get more profit.

Remember you don’t want to wait until after the bottom has passed so you can see it. Prices, terms, and likely interest rates will no longer be in your favor. It is much better to buy a little before the bottom under the best buyer conditions. When you buy right your property is always making you money. With positive monthly cash flow and equity appreciation through the payment of debt.