Buying a property is a lot like strategising for a footy match. It requires careful planning, selecting a route to success and sticking with it. With poor strategising, your investment plan may resemble an under-10 C’s match: disorganised, uncoordinated, a mad scramble of bunched up players going for the ball…

But that’s not the game we want to be playing. We want to be more like the Penrith Panthers, dominating each game and cruising to three consecutive premierships.

This is where strategy selection is a huge part of buying an investment property. In this post, we’ll discuss the strategies of flipping, refurbishing or renting and outline which one is best for you:

Flipping

We’ve all seen the TV shows and thought, ‘Yeah… I could do that.’ But while flipping shows make it look easy, it’s actually quite a difficult strategy to execute. That being said, for the right person, it can be lucrative and worthwhile.

Flipping involves buying a distressed, rundown property, fixing it up and selling it for more, all in a short period of time. One of the key considerations is the time it takes to renovate the property, since you’re technically losing money every second that it’s unoccupied.

Pros of flipping:

• Speedy returns
• Fast liquidity and access to cash
• Considerable gains to be made

 Cons of flipping:

• Building knowledge usually required for maximum profit
• High costs of renovation
• High stress
• Short-term capital gains imply higher tax paid
• Approvals and trade shortages may cause delays

Refurbishing

Next, we have refurbishing. Similar to flipping, it involves buying a rundown home for cheaper and renovating it. But instead of quickly selling it to make a profit, you hold the refurbished property and rent it out. This method also has its pros and cons:

Pros of refurbishing:

• Less stressful than flipping
• Lower property price
• Good long-term capital gains available

Cons of refurbishing:

• Building knowledge usually required for maximum profit
• Speed is still a factor, requiring the renovation to be done as quickly as possible so as to minimise vacancy.
• High costs of renovation

Renting

And finally, we have renting – the simple act of buying an investment property which requires minimal work, and renting it out almost immediately. This is the most common strategy for property investors in Australia.

Pros of renting

• Lower stress strategy, with little to no renovation
• Immediate income generation
• Long-term capital gains also available

Cons of renting

• Property management costs can be high
• Income generation is steady but can be slow
• Returns are not immediate, unlike with flipping

Still unsure of which strategy best fits your ambitions in property investment? Talk to the experts at Patrick Leo property investors. Patrick Leo is Australia’s best team of property investing specialists. Our goal is simple: to get to know our buyers and pair them with high-quality properties that are aligned with their financial objectives. Get in touch with the experts at Patrick Leo today.