FIX & FLIP

BUY & HOLD

One key distinction between buying and holding and flipping properties is that the former can provide you with passive income, while the latter offers active income.

 

Passive income is money that comes to you each month, wherever you are, from your investments. It could be from stocks and bonds or from owning rental property and receiving rental income each month, provided you hire a management company to do all the required tasks, such as finding tenants, collecting rent, and taking care of maintenance.

 

Active income is money that you earn. That includes your salary from work, as well as profits you make flipping houses. Flipping is considered active income, regardless of whether you are doing the physical labor of stripping floors. It is still a business that you engage in—finding a property to flip, purchasing it, obtaining insurance, overseeing contractors, managing the project, and more.

In this sense, flipping isn't just an investment strategy like buying and holding stocks or real estate. If you have a day job, keep in mind that your spare time will likely be taken up with all of the demands that flipping a property entails.

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