What if during the 3 to 6 months you are working on the house you see a significant change in your market? What if prices down 5, 10 or 15% during that time frame? You need to be prepared for that.

What if you significantly under estimate repairs? What if a $10,000 projected repair budget turns into a $35,000 budget instead? If you had decided to do a deal with a solid $25,000 in profit, but your budget for repairs is suddenly $25,000 higher, then you are working for free.

Also, once you sell a house, you stop making money on the house. With rental property, your tenant pays most, if not all, of the expenses on the property while you continue to profit from income on the house from rents especially as they go up over time, tax incentives from depreciation on the house, equity build-up as the loan is paid down and appreciation from the rise in values over time.

In summary, while flipping properties can be a good way to generate large chunks of cash, it is not easy money. Furthermore, it should be considered speculation and not real estate investing. Long term real estate investing in rental property gives you long term benefits from the property.

About the Author:

James Orr is a professional real estate investor and marketing expert.

You can subscribe to his real estate e-newsletter and access audio downloads, articles, marketing materials and educational real estate videos at his Real Estate Investing blog.