Living in Contra Costa County: The difference between a Flipper and a Rental - Real Estate Investing

The difference between a Flipper and a Rental - Real Estate Investing

The difference between a Flipper and a Rental - Real Estate Investing

There are two basic kinds of Real Estate Investors; Those that want to buy and flip and those that want to buy and hold as a rental. Each one has a different strategy and approach to buying. Now there is some middle ground, but in general these are the two approaches.

A real estate flipper wants to pick up a home cheap enough that they can use Real Estate Investingtheir expertise to do some repairs and then sell it or a profit. Generally they want to do this in a relative quick time frame. Time is money to the flipper. Some flippers have more integrity than others, but the focus of any work they do will be making the house look good and raising the value in the eyes of a buyer. Often this involves a lot of cosmetic repairs and fancy upgrades; like Granite Counter Tops. As a flipper even the costlier sounding upgrades like the Granite counter tops are done on the cheap; using left over granite, granite with minor imperfections, or pieces with lot of seams (but it still looks great and buyers love it). They do a lot of landscaping; often this involves new grass and large swatches of tan bark, maybe some economical flowers planted. Frequently flippers are less focused on anything beyond cosmetic and obvious issues. New Paint and Floors often round out a flip. When I represent buyers I am very carefully with flipper property inspections as often crucial repairs are left undone – if not obvious.

Now I want to make it clear I do not fault flippers or focusing on cosmetics. (Although I do not approve of hiding issues, especially safety issues.) The fact is most flippers are focused on what sellers – they want someone in contract at a good price. They also understand most buyers will wisely be having a home inspection. I have never had a flipper refuse to correct a safety issue when brought to their attention.

The other side of the real estate investor coin is the investor that wants to buy and lease out a home, making money on rents and/or long term appreciation. For this type of an investor a fixer up will work, but they are just as happy with a home in decent shape; now generally speaking they are not looking to pay for a lot of upgrades. They do not want a fancy home. Most renters rent because they cannot buy, do not want to pay rent for (or cannot afford to pay rent for) fancy amenities they do not own.

The ideal home for this type of Real Estate Investor is ready to rent when they buy. It may be a little dated and not the fanciest, but certainly functional. It will have solid bones and maybe some hidden things that can be brought out at a future date – like old hardwood floors under the carpet, or a large lot that is not well landscaped. Now the really cool thing for this type of investor is that assuming they do not have to invest big to get it ready to rent and basically just go with older stuff in place, they can then do upgrades when they are ready to sell and get flipper profits.

Now these are broad generalities and there is a lot of other real estate investment strategies in between. I know investors who like to buy and hold high end homes, even at a loss on rents, in order to sell down the road. There are landlords that feel it pays to do nicer upgrades for tenants – and all of these strategies can work in the right situation for the right investor.

Gene Riemenschneider is the author of The Free Book of Real Estate Investing and is the Owner/Broker of Home Point Real Estate in Brentwood CA; serving the East Contra Costa County Communities of Brentwood, Oakley, Antioch, Discovery Bay, Pittsburg and beyond.

Originally this was posted at HomePointContraCosta.com. Home Point Contra Costa is my new site dedicated to Homes in Contra Costa County. I hope you enjoy the post and will check out my new web site. 

Get an E-Mail Subscription to this Blog!

Enter your email address:

Delivered by FeedBurner

By Gene Riemenschneider

Broker and Owner

Home Point Real Estate  - 925-260-4321 - Turning Houses into Homes

Ask about the Free Book of Real Estate Investing!

 Find Me at these Sites:

Facebook     Google Plus     LinkedIn     Twitter     E-Mail

 

 See All:Brentwood Homes    Discovery Bay Homes       Antioch Homes         

       

      Oakley Homes               Pittsburg Homes    Bethel Island, Knightsen, Byron

       

All East Contra Costa Homes

Gene Riemenschneider
Owner/Broker
Home Point Real Estate
50 Sand Creek Road, Suite 316
Brentwood, CA 94513
925-260-4321
Lic 01492725

Gene Riemenschneider on Google+

Comment balloon 7 commentsGene Riemenschneider • November 17 2015 09:19AM

Comments

Hi Gene Riemenschneider , Nice blog showing the differences.  I have worked with some of each.  I prefer working with just regular Buyers.

Posted by Larry Johnston, Broker,Friends & Neighbors Real Estate, Elkhart,IN (Broker, Friends & Neighbors Real Estate and Elkhart County Subdivisions, LLC) about 3 years ago

Gene - Thanks for sharing this post on the two main types of residential real estate investors. There is a different strategy for fix and flip versus buy and lease.

Posted by Troy Erickson, Your Chandler, Ahwatukee, and East Valley Realtor (Diverse Solutions Realty www.ChandlerRealEstate.weebly.com) about 3 years ago

Gene - your very informative post highlights the differences very well and answers many questions.

Posted by Grant Schneider, Your Coach Helping You Create Successful Outcomes (Performance Development Strategies) almost 3 years ago

Nice job comparing flippers and investors. I wouldn't want to be a landlord but the idea of flipping has always interested me. Just don't have the guts to do it.

Posted by Sharon Tara, New Hampshire Home Stager (Sharon Tara Transformations) almost 3 years ago

Good explanation between an investor and a flipper.  I never really gave this much thought until I read your post.

Posted by Pamela Cendejas, Second Self Virtual Assistance (928) 692-3235 (Second Self Virtual Assistance) almost 3 years ago

Very well stated Gene Riemenschneider . The flippers here tend to focus more on interior cosmetics like paint. Remarkably, to me at least, they have not caught on to the importance of 1st impressions by making sure the landscaping/curb appeal is good.

Posted by Bob "RealMan" Timm, Bob Timm, Project Coordinator for Tivoli Homes (Tivoli Custom Homes) almost 3 years ago

Great points, Gene Riemenschneider . I've enjoyed working with flippers, but that can be short-term, investors seem to be in it for the long haul.

Posted by Kim Gaston, Colorado Springs REALTOR®, CNE (719)661-6987 (FRONT PORCH TEAM REAL ESTATE & PROPERTY STYLING - Brokerage, Colorado Real Estate Advisers LLC) almost 3 years ago

Participate