Investing in Real Estate... Flip or Hold?

Real property values in the Kamloops area are on the up from last year by almost 10%. As mentioned in the previous blog, sales are continuing to climb this year and forecasted to continue to do so for 2016.

The question today is, flip or hold that real estate investment when you see such possibilities as stay-cationers looking for weekly and even monthly rentals to go on their holidays?

Since HGTV came out with shows about renovating & flipping a few years back, it became “the thing to do”. After the economic downturn in the USA in 2008, this idea has lost much of its romantic notions and popularity.

Let’s look at some pros and cons of both anyway.

Flipping (purchase a property and sell within 6 months)

Pros

  • Capital isn’t tied up long term
  • Less risky investment than stocks – real estate market is slower to turn unlike stock market which can turn in the middle of the day
  • Purchasing a “fixer” to flip can see a profit, when done right, at the right time

Cons

  • Higher taxes known as Investment income (Capital Gains)
  • It’s not always easy to find the perfect opportunity to flip, takes sound market research
  • Need to go in understanding the possibility of ending up with a long-term flip
  • Banks and lending institutes are less comfortable financing flips
  • The need for higher cash reserves on hand to handle the reno's and staging

Holding (Long-term investments - not looking to sell sooner than a minimum of 1 year)

Pros

  • Regular monthly income, cashflow
  • Lower annual taxes and fewer upfront costs
  • A greater possibility of making a profit as time goes by as housing appreciates in value
  • Financing more readily available

Cons

  • Being a landlord, finding good tenants
  • Finding a good property manager, when owning multiple long-term holdings
  • Possibility of ending up with a cash cow, not a cashflow investment

If you still have questions, please contact us or talk to your investment adviser. In the long term, what you really want is to keep more money in your pocket - while making a profit.

Handy Links:

Up to Date Listings: http://www.dqteamkamloops.com/

Municipal information - http://www.kamloops.ca

Regional & Municipal Information - http://venturekamloops.com

Things to Do here: http://www.tourismkamloops.com

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