When deciding to invest in property, a crucial question that many people ask is whether to flip houses by renovating and selling them for a profit or buy property to rent it out and become a landlord in the process. It really depends on your financial situation and your goals, as well as what kind of person you are. Although you have to be money-minded for both options, renovating and selling is more about being creative, hands on and entrepreneurial. Buying to let on the other hand is about having a business head and sharpening long-term management skills. To break things down, here are the costs and benefits you can use to weigh up each option for yourself.

Renovate and Sell

Flipping houses is a great way of breaking head-first into the property investment game. It can be an incredibly exciting and satisfying process if you can successfully buy a decent, relatively cheap house, renovate it within budget and sell it on for a sweet sum of money. But that’s a big ‘if’…

Pros

• Quick Profit –Depending on how much time and energy you can afford to invest in your property, you could be pocketing profits a couple of times a year as some investors can sell houses for two or three times the amount that they bought them.

• Creative Outlet – If you’re a creative person who enjoys designing, improving and getting your hands dirty, then fixing up a house to increase its value would be a great project. Just remember not to go wild and stay within budget!

• A Profession with No Qualifications – You can learn a wide range of skills and gain masses of experience with no need to qualify. If you can make a profit within a good timescale then you’re successful. Some people eventually become professionals and flip houses as their full-time job.

Cons

• A Big Risk – Buying and renovating a house is a big gambling game which can make it equally thrilling and nerve-wrecking as the window for opportunity is as big as the potential for loss.

• Unexpected Expenses – Most people buy old houses because they are cheaper but this means they often have unanticipated construction issues lurking under the surface that could blow your budget out of the water.

 

Pros

• Additional Income – Rent is a great way to make regular ‘passive’ income that can also cover your mortgage repayments at the same time.

• More Reliable Market – Buying to let is a more reliable way of making money as it’s not massively affected by fluctuating house prices and people are generally more willing to rent.

Cons

• Maintenance - You are responsible for maintaining the property, which can be a constant cost. Help make it more affordable by investing in specialist furniture and insurance deals that can help you to cover any damage or repairs while the tenants are living there.

• Managing Tenants – Either you or your estate agent needs to manage contracts, costs, queries and complaints from tenants. Agents will of course deduct a percentage fee.

 

A crucial aspect that will affect your decision is the timing of your investment, as the condition of the property market could significantly sway your choice. Assess what is the most profitable by comparing various factors and seeking out advice from reputable estate agents and reliable websites to help guide you.