Central Ohio Housing Market Update
- Columbus is one of the fastest-growing cities in the US. A recent study by ARC ranked Columbus #6 in the top cities for employment relocation. Since most employers make relocation decisions in the 4th quarter, we anticipate a population increase of up to 10,000 in the next 3 months.
- Baby boomers and millennials are buying more homes than ever. Whether they’re downsizing or buying their first home, one unique thing about this demographic is they buy homes year-round, rather than timing their move around summer vacation.
- There is a lot of uncertainty around this year’s election and how it will impact interest rates. If interest rates go up, home prices may go down. For more information on this subject, be sure to check out my blog on how the election will impact the real estate market.
Flip or Rent: What’s the Best Way to Invest in Real Estate?
Are you trying to build your “nest egg” so you can retire earlier and with more passive income? Or are you looking to quit your current job, and take on a new one that provides more independence and growth? Deciding on whether or not to flip properties or to lease them out is not always an either/or question. Often times, real estateinvestors start with one and switch to another, or do both simultaneously. Further, house flipping isn’t really an investment in the way owning rental property is. Flipping is a job and requires hard work and daily involvement to generate any money.
If you already have enough money to retire, then using some of your extra cash to invest in multi-family properties or single family homes can add some nice passive income. Also, if you plan to continue in your current career, these types of rental properties can help build wealth over time and diversify your financial portfolio. You can protect and grow your principal investment while earning significant income on the side. However, if you are looking for a career change, and not ready or cannot afford to retire, flipping houses can be a rewarding occupation that provides a big paycheck as well as the independence that comes with self-employment. Then, once you build up more dispensable cash, you can start buying rental properties as well which will allow you to retire earlier, and hopefully, with a bigger “nest egg”.
Flipping Pros: Quick Cash and No Long Term Headaches which can come from maintaining properties and dealing with tenants
Flipping Cons: Need a lot of disposable time and energy to dedicate to project managing the flip and may be subject to high income tax and short term capital gains tax
Renting Pros: Long term, consistent earnings and can do it alongside working another full-time job or while retired. Also, renting can have tax incentives rather than further tax burdens.
Renting Cons: Have to deal with maintaining properties over long-term and potentially difficult tenants.
To put it simply, flipping is a business and owning rentals is an investment. You can be successful doing both separately or by doing them together. If you have the time to dedicate to flipping, you can then use the extra income to purchase rental property. Build up your passive income, so you can spend less time working. Despite your short-term goals, the long-term goal should always be financial independence and more free time to enjoy it.
If you have any questions regarding real estate investment or property management, call the Alfriend Group today at (614) 395-1776.