In today's real estate market you may be able to find a really good deal looking at Bank Owned Properties. Their inventories are at record highs and many banks are looking to cut their losses and sell the property. Once you buy that bargain, you need to decide if you want to Rent it out or Flip the property when finished. There are advantages to each.
Rent:

1. Spend less redoing the property realizing that renters will not take care of the property and you may have to redo part of it before selling it.
2. It takes less time to rent a home than it does to sell it. (You do not have to wait 1-4 months until closing.)
3. You can mortgage the property to pull ~ 70% of the value out of the property, freeing up some of your cash for future investments.
4. You can depreciate the house (tax advantage) and as the Real Estate values increase, your profit goes up.
5. You have a renter covering your expenses for the property.

Flip:

1. You will likely spend more on the renovation initially as you want the house to look wonderful for the potential buyer.
2. You will free up all of your cash in your initial investment as well as your profit.
3. You can buy another property with the cash from #2 allowing you do make more profit initially.
4. You do not have the risk of a renter damaging the property.
5. Once you sell the property, you liability is limited (similar to liability you would have after you sell any home).

Either option requires you to be determined to return the house to a livable condition ASAP (3 - 6 months) and manage your contractors during that period. Make sure you understand the projected future market value and / rental income of the home before investing in it as well as your expected expenditures.
Contact your local REALTOR for more information and assistance. In Northern NJ. Information provided by your Northern NJ REALTOR, James Boyer.

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