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Real Estate Investment: Flipping vs. Rehabbing

Updated: Jul 7, 2021

Oftentimes, people use flipping and rehabbing interchangeably. However, both terms are not always synonymous as they may differ depending on how the investors will restore the soul of a distressed property. Let's dig deeper.


Flipping

Well, technically, flipping means purchasing a rundown property, turning them around, and selling them for a profit after holding them for quite some time. There are two types of flipping:


  1. Focus more on the market conditions over the property itself. With this being said, investors will typically target properties amid a highly competitive and appreciating market selling the property with minimal or no additional investment at all.

  2. Consider buyers' perspectives and preferences reflecting what they want to improve on the property to play along with renovations successfully.


In layman's term, flipping is investing in undervalued properties: purchasing them at a typically low price, renovating them or holding them for a short period, and waiting for the market condition to be ideally pleasant; then selling them for a profit. Also, flipping does not require utmost renovations particularly on the property's structural design and layout; if you go beyond that, you are probably rehabbing.


Rehabbing

If the property requires a lot of work, or simply, a complete rehab works, it is rehabbing then. This strategy in real estate investment is one of the most lucrative ones -- but not checking off the list: time, capital, great team, and outstanding plan. If it does require more time, it requires patience as well. Remember how worth it the reward would be? Well, not worth having comes easy.


Additionally, investors venturing into this strategy would either sell, rent out, or use the property personally.


However, regardless if it's a flip or a rehab property, as long as you invest your time and money wisely without running after the profit itself, tap on your shoulders, you did a great job! Whether you flip or rehab to sell or to rent out, the journey will always overpower the reward.


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