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2015-03-24 07:00:53
Flipping vs Buy-and-Hold

Flipping Salt Lake City Real Estate vs. Buy-and-Hold

 

When you own the Salt Lake City home your family lives in, you are by definition a real estate investor: it comes with the turf. Your investment is essentially a passive one. Until the day you decide to sell and move on, any improvement in its value is secondary to how well it serves to shelter your family.

How you think about your investment—and how you proceed to manage it—is altogether different when you buy a Salt Lake City home purely as a financial venture. For one thing, you face an immediate strategic decision: will you be flipping for a quick short-term profit, or aim for the long term through a buy-and-hold strategy? You have to weigh some pros and cons in order to make the right decision.

Flipping

Pro: Capital is Freed

A flipping strategy minimizes the amount of time your investment capital is committed, freeing it for other uses. Should you identify another potentially lucrative investment, you will be able to take advantage of it.

Con: Unexpected Challenges

While flipping for short-term profit has definite ‘hands-on’ appeal, first-time investors can be surprised by unexpected complications. Properties that appear to be undervalued (and ripe for a quick flip!) may require costly fixes. Overspending on renovations quickly eats into profits, but under spending can lead to a lengthier holding time. Experienced Salt Lake City flipping veterans have learned to successfully gauge a property’s true turnaround value.

Additional Consideration: Taxes

Salt Lake City flipping has tax implications that impact the bottom line. Profits from a property owned more than a year are generally taxed at the ordinary income tax rate, while a property held for less than a year may be taxed at the capital gains rate. Local and state tariffs need to be considered as well—this is where input from a qualified professional is important.

Buy-and-Hold

Pro: Passive Investment

If management is outsourced to a professional property manager, the buy-and-hold strategy will require less personal attention than flipping does. Preparing a property for a flip often involves considerable time commitment and adept contractor schedule-juggling.

Con: Management Costs

The passive investment advantage holds true if outside management is contemplated— with commensurate expense. If you enjoy the challenge of successfully managing a property, this negative doesn’t apply.

Pro: Fewer Properties Need To Be Identified

Ultimately, successfully executing a flipping strategy means scrutinizing a huge number of properties over the course of time. In contrast, a buy-and-hold strategy necessitates finding only a few great bargains. Pursued intelligently, both buy-and-hold and quick flip strategies have proved profitable for many investors. Both call for finding solid value in Salt Lake City properties—which is where giving me a call comes in!

 
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