Should you buy and flip property or just hold it

If you have watched a property television show lately, you might be tempted to join the industry because of the way those people make it look so easy to make big money. The idea rotates around looking for a property that you transform and sell off for profit.
Steven Senkungu, a general contractor and real estate investor, says the choice to either flip property or to hold it, usually depends on a number of reasons such as the state of the market, the type of property and the amount of money invested.
“Personally I do not like the flipping business it usually has too many variables involved and things often go wrong. I have been doing renovation work for close to 20 years, for other real estate investors but I prefer to keep the properties I buy and renovate. I have seen many investors fail to sell properties after investing so much in them because they become too costly. Once in a while though if all variables line up you can make good profit,” Senkugu shares.
Before you decide whether to flip a property make sure your numbers make sense.
He recommends that if you can get someone to buy the property at a sum that covers your investment, then go ahead and sell, otherwise getting your properties rented is key, a good steady income that pays all your expenses and gives you some extra cash will grow your net worth. Even if a property does not appreciate much, you are making money; the tenants are paying down your loan and giving you equity.
Jamal Ayub, a real estate investor, reveals there are two different types of house flipping, one where an investor buys a property that has potential to increase in value with the right repairs and updates.
After completing the work, they make money from selling the home for a much higher price that what they purchased it for.
The second form is when an investor buys a property in a market with rapidly rising home values. They make no updates, and after holding the property for a few months, they resell at a higher price and make a profit.
Ayub insists that if flipping is done properly, it is actually a great investment. One of the ways to do it right is not to get a loan to either buy or renovate property.
“Renovations are hard to budget for and can be risky, so doing them with borrowed finances increases the risk and the pressure. I know real estate investors who have had to lose their properties or sell them cheaply just to pay off a money lender,” he notes.

Know the market
Senkungu notes that newcomers fail to read the market trends and end up paying heavily for their mistake.
“I have seen young people become excited after making profit from their first investment. Instead of pausing to study the market, they take all their profit to their next project and consequently make losses,” he notes.
The contractor recommends looking for properties that are cheaper but have potential to become better and attract high income earners.
“If you are new to the industry, it is better to hire a seasoned property agent to get you to the right neighborhoods based on your price point, budget for renovations, and desired profit,” Senkungu adds.