You know the expression, “Go with the flow”? It means not resisting what is. It means going with what works. Moving in the direction in which everything else is moving. Why? You are more successful this way. You encounter less resistance – and to use another saying, “resistance is futile”. Agree? Yeah. Going with the flow tends to work out better. In real estate, there is an ebb and flow just as with most things in life.
Sometimes the market is up. Sometimes it’s a bubble. Sometimes it is down. Sometimes it’s way down. If you are a flipper, you can end up making a lot of money – and you can also lose a lot of money. Many bad-luck and lost fortune stories in real estate stem from someone starting out doing really well during an up period and end up losing their shirts during a particularly rough market spot. It’s a risky game – and you don’t always end up on top. That’s not to say flipping can’t be effective – but it’s certainly not without risks. Sometimes flippers end up paddling against the flow and they drown. Yikes.
Buy and hold real estate goes with the flow…why? You aren’t riding the highs and lows of the market. Provided you get a good buy-in rate, you don’t need to worry about your market value. You only need to worry about rental prices – which are far steadier than buying and selling rates. It’s a far less choppy path to wealth. You get your monthly cash-flow – you budget for expenses – and you can relax and focus on the things you love or, if you want, focus on expanding your portfolio even further. Not bad, right?
If you’re trying to figure out what kind of real estate investor you are, consider the above. Buy and hold investing is a true path to wealth. Flipping rides some serious waves. There are no guarantees in either path, but one is a lot more calm than the other! How strong are your oars? Do you have a life vest? Be sure you are equipped for the ebb and flow of real estate before you invest.