What to do With Residential Properties | Fix & Flip Properties

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Fix and Flip
vs.
Buy and Hold
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Theres more than one way to invest in real
estate, and it often comes down to a choice
between the fix and flip or the buy and hold
strategies. Each strategy comes with its own
pros and cons, so if youre considering both
investment options, here is a quick guide to
help you decide.
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Fix and Flip
Recalling our Ultimate House Flipping Cheat
Sheet for Beginners article, this strategy
involves purchasing a property, making
improvements, marketing it, and then selling it
for profit. Flipping houses or commercial spaces
requires a lot of effort within the shortest
amount of time possible. This allows for a
faster ROI, freeing up investors capital for
their next money-making project.
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Finding the right property to renovate and sell
The key to maximizing profits here is to find
properties lower than the market price, like
foreclosed homes, and giving it a reasonably
financed makeover. CNBC reports that
inexperienced flippers tend to put too much
money into renovations. As a result, these
expenses quickly add up and investors might find
that their net profit is not significant enough
for the work put into the flip.
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But when financed and managed properly, fix and
flip properties can promise instant gains
minus the holding and transactional costs of the
buy and hold strategy. When it comes to the
choice of residential and commercial property to
flip, and Entrepreneur article suggests
canvassing for fixer-upper properties in
the nicest neighbourhoods. This means that the
property should be adjacent to decent schools,
have easy commute options and routes, and is
part of a competitive market. The last point is
especially true for flipping commercial
mortgages properties. Nearby malls and buildings
mean a bigger guarantee of faster returns on
office and retail spaces.
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Buy and Hold
Collecting properties is equivalent to amassing
wealth. The biggest disadvantage of the buy and
hold method is that it requires a sizable amount
to invest with, especially when looking to
purchase several properties. However, investors
can be rewarded with steady returns by putting
them up for lease, which can definitely add up
over time.
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What to do with residential properties
Long-term rental Apartment Units Having
long-term tenants ensures a more consistent
income, which means that the property will
continue paying for itself for the foreseeable
future. As a landlord, you wont have to worry
about marketing the space, paying for utilities,
or doing basic maintenance. Short-term rental
Vacation Homes If you own a property in a
touristy destination, real estate investor
Sarnen Steinbarth explains that your property
offers higher income potential as a short-term
rental. Luxury homes, seasonal vacation rentals,
and Airbnb units can be very lucrative, but this
means that youd have to consistently market to
renters. Depending on your agreement with the
tenant, youll most likely be shouldering
utility and repair costs, as well.
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What to do with commercial properties

• Long-term rental Retail or Office Space In a
  competitive market, youll be able to rent out
  your commercial property in no time. Do note
  that commercial leases have longer terms than
  residential units, and whether a contract renews
  automatically or not depends on your agreement
  with your tenant. There might also be
  significant renovations to be done on the
  property. This is so it suits the business
  branding, especially in retail spaces, or the
  companys needs, as
• in the case with offices.

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Short-term rental Coworking Space
Alternatively, you can also capitalize on the
growing number of startups and young
professionals in your area by creating a
coworking space. According to a Small Business
Trends post on the rise of coworking, 2,188
spaces opened in 2018 worldwide, with half of
them located in the US. The number of remote
workers and freelancers continue to rise, which
by this year is expected to account for 40 of
the total workforce. Many of them are turning to
these spaces that offer different types of
packages that fit their needs. As the investor,
you can have a flexible setup, similar
to Industrious and its canvas suites for teams of
more than 20, private offices for smaller
groups, and community memberships for
entrepreneurs and freelancers just looking for a
dedicated desk or flexible seating. This way,
you can rent out multiple flexible spaces within
your property to more people at a time.
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Short-term rental Pop-up or Events Place For
those who dont want the hassle of managing this
type of business, what you can do is to provide
a space for pop-up shops or a rental space for
private events. All youll have to do is provide
basic amenities, such as bathrooms and lighting,
and give free rein to your tenants. Whether
youre dealing with a residential or a
commercial property, knowing your market is key
to maximizing your investment. That, and a keen
sense of property management are very important.
Your responsibilities include reporting your
rental income to the IRS an important step in
getting tax deductions that come with owning
rental real estate. And of course, knowing how
to deal with tenants is essential, too.
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The fix and flip strategy is more suited for
investors working with a smaller capital and
looking for quicker returns. This requires
realistic expectations and experience with making
renovations that wont diminish profits. If
youre looking for a more long-term and steadier
investment, you can opt for the buy and hold
method, provided that they know how to manage
people and amenities. With both strategies,
understanding the market is crucial.
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