Rehabbing Properties - Buy And Sell V/S Buy And Hold

Rehabbing properties is a great option if you want to build wealth over a long period of time with limited time and limited funds. The quintessential question that arises while rehabbing properties is whether to sell properties or to hold on to them. The actual question that needs to be asked is: Why keep rehab properties? Why not buy and sell and then get paid? The first question that needs to be answered is: How soon do you need the cash? Most short term cash can be generated by selling fresh rehab properties. But you will again give away that money in the form of taxes next year in April. However, if you buy and hold the rehabbed property, you will stand to earn a lot more.

While rehabbing properties, if you buy and hold the rehabbed property, you will also enjoy many benefits like cash flow, tax breaks in future and more cash with future appreciation of rehab properties for sale. A few months after you buy and hold the rehabbed property, you can still put more cash into it, when you refinance the property from your hard money to long term financing. While rehabbing properties, the short answer is that you as an investor will make a lot more money if you buy and hold rather than if you buy and sell. However there is a disadvantage to saving rehab properties for sale. You need to be a landlord and its your decision. This is fine as long as the land lording is done properly.

However, there are also a few reasons why you should not buy and hold as far as rehabbing properties is concerned.

• In case of rehabbing properties it is difficult to "buy right" and also get a positive cash flow. If you buy and hold a property for sale, all it takes is one small thing going wrong to put you back to square one.

• Most of the people invest in rehab properties for sale for income purposes. However, this income comes in very small amounts. In case of rehabbing properties, this money is spent along the way. In a period of 10 years, your net worth will not have increased substantially. But, when you buy and sell at a profit, you get large profits instantly. You can use some of the money obtained from rehabbing properties for your living costs and you can re invest the rest to increase your net worth.

• While rehabbing properties, even seasoned investors are unable to judge the "bottom" in case of a rehab property for sale. You can't even be sure when the cycle has "topped". You will have to be extremely lucky to make a maximum yield on the properties you hold.

When you are rehabbing properties with the buy and sell strategy, you are involved in a lot more properties. You may also find a striking deal that will evidently tell you to buy and hold. Hence, you will also have more hard cash which you can again invest and utilize for rehabbing properties.