Investors looking for a place to grow their money might look to real estate. Real estate, regardless of overall economic conditions has historically proven to be the most reliable investment when compared to stocks, especially the volatile commodities market. But Before We Start I have to thank Mr. Jervis for contributing to this post, Mr Jervis is the Owner of a Real Estate Company in Destin Florida.

There are two principle strategies for real estate investment: buying homes to rent out or buying homes to flip. Flipping is the investment practice of purchasing a real estate property, making necessary updates/changes and then selling it for a profit.

• Flipping Cons

There are risks involved with every investment. Read any prospectus and there will be fine print at the bottom or the end of the brochure stating so. Flipping houses, though possibly lucrative, can be a bad investment.

1. Tied-Up Cash
   The biggest downside to flipping homes is having investment capital “frozen” in the investment of real estate. Unlike stocks, an investor cannot simply pull-out at-will. Divesting can be partially accomplished through renting the property or entirely by selling.
2. Tax Consequences
   There are tax consequences to selling a home that is not a primary residence. Capital gains taxes, other federal taxes and state taxes could apply to such an investment. Prior to purchasing a house to flip, an investor should seek the advice of a professional tax adviser.

• Flipping Pros

Flipping real estate is not without its rewards. If it were a strictly losing proposition, no investor would even consider using this strategy to turn a potential profit.

1. Large Gains
   The common conception about flipping real estate is purchasing a foreclosure, rehabilitating it, then selling it for more invested. But several real estate investors actually never put another dime into the home other than the purchase price. These investors typically buy new homes from speculative builders whom are overextended for a considerable discount and sell it for market value just a few months later.
2. Being the Boss
   Investors that master the process of flipping homes can become financially independent. Homes bought for 20 to 25 percent or more under market value will make a great return on investment–even if the dwelling needs repairs.
3. Income Stream
   Investors that purchase a property to flip only to find the return is significantly smaller or nonexistent can simply hold the property and rent it. In most cases, the rent will either cover the mortgage or create a positive monthly cash flow. When enough equity accumulates, the home can be sold for a profit.