Buy and Flip:

This is the process of purchasing a home at a below market price and doing required repairs and or improvements and then offering the home for sale for a profit.  This process has become famous on TV shows such as "Flip this house" and others.  Often times on the TV shows the producers do not show the entire transaction.  Instead they tend to glamorize this process and simplifying the process by eliminating such things as purchasing cost, holding cost and selling cost.

This is also a favorite of "Real Estate Investment Gurus" who often hold free seminars to entice potential investors to come for a free seminar that will show them how to make millions of dollars with "No Money Down", "No Credit", "No Risk" get rich quick schemes.  Of course to really learn how to do this they will require that you attend a "Boot Camp" where they will teach you everything that you need to know for somewhere between a $2,000 to $10,000 investment.  Of course this is explained as being equal to a 4 year college level program in Real Estate Investment for the cost of only one years cost and you can learn everything in a weekend or two. If you can not attend the boot camp you can always buy their CD-DVD programs for only $3,000 or so.

Most new investors do not want to have any hassles with things such as tenants, repairs, vacancies, etc. Therefore they try to bypass these items and simply try "Buy and Flip".

 Buy and Hold for Rental Purposes:

This is the way that most fortunes are made in Real Estate. This is not as glamorous as "Buy and Flip" and it does have those inherent negatives such as dealing with tenants, etc. but when you study the philosophy behind owning rental properties this is the prime way to "Get Rich in Real Estate" but instead of quickly you do it slowly and methodically. 

Tenants offer the investor a vehicle to have someone other than themselves to pay for your real estate investment. With a positive cash flow rental real estate not only pays for itself but also generate a return on your investment.  Houston at this time offers some of the best Real Estate Investment potentials anywhere in the United States. 

Tax benefits of Real Estate Investments

No information given here is to be construed as Tax Advice.  You should refer to the IRS at www.IRS.gov or contact your tax advisor or CPA or Tax Attorney for professional advice as to your particular situation.  Please visit our separate page on Real Estate Tax benefits for Investors. As always, this article is intended to be accurate but is not intended to replace tax advice from a competent professional.