Passive income is my favorite way to make money and it’s the reason I like rental properties vs. fix and flips.

However, some people believe rentals are more work because you have to maintain it and deal with tenants as opposed to just buying, fixing and selling it.

![](https://steemitimages.com/DQmb32RyQKAJPk1YPK7oWLt6bDLpBszWwF77GsQ93kB1dyQ/image.png)


# Rental Properties vs. Fix and Flips
Or I should say passive income vs. transactional income…

### Fix and Flip
+ Find Property
+ Buy Property
+ Fix Property
+ Sell Property
+ Repeat
### Rental Property
+ Find Property
+ Buy Property
+ Fix Property
+ Fill Property
+ Maintain and Collect Rent (cash flow)

As you see can the first three steps are usually the same, then it changes when you fill it with a tenant as opposed to selling it for a profit (hopefully).

### Example
Let’s say you find a flip worthy property that will have an after repair value (ARV) of 150K.  You get it at 75% of ARV less estimated rehab costs, which is the basic formula for a profitable flip.

Then you rehab it, list it and sell it – taking home a $15K profit.

Generally you should look to profit at least 10k for every 100k spent, its the rule a flipper I know always used.

Sweet, you just made 15K in a few months, and yes I do count the time spent finding the property in the first place.

Now it’s on to the next one, hustle to find a property. Close, rehab as fast as possible, get it on the market, hope the market hasn’t shifted against you and sell it.

**Done!  Let’s do it again…oh my god I’m exhausted already.**

Instead, I find a property, then buy it and get it rent ready (which is much less rehab than a flip), fill it with a tenant and then manage it.

If buying the rental with cash (which is generally the means when buying flips); I’ll make roughly two-thirds of that 15K from positive cash flow in the first year.

Note: This is assuming I am getting at least an 8% cash on cash return, which if you’ve read my book or articles about “buying right” you know is the minimum I will accept.

Thus, halfway through year two I’ve collected as much as the flip made and now I keep on collecting.  By the end of year two roughly 20K has been made and I will continue to collect year after year without having to chase down a new property every three months.

### What about “dealing” with the rental property?
It is somewhat amusing how much people harp on managing and maintaining a property and tenants.  I self manage all my properties, some months I get zero calls.  Some months I get three calls, either way its never a ton of work.

Additionally, when we buy right money is already factored in for maintenance, thus it is not cutting into those cash flow returns.

I’d rather have to send my handy man to fix something or fill a property once a year then spend time looking for new properties, hustling to fix them up and then sell them all the time.

**Maybe I sound lazy? I like to call it…… Ambitiously Lazy!**

Organize and collect my friends, organize and collect.

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### <center>To Learn More about Rental Property Investing
Visit: [www.scaredycatguide.com](http://scaredycatguide.com/)

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