Originally Posted by Rictor

It really only works if you pay cash for the house and don't have a monthly payment to make. This is because renters suck and will rarely actually give you any money. Then, depending on the laws of your state, they get to live rent free in your house for several months before you can legally evict them. Then your spend $50,000 repairing all the damage they did to your house while they lived there, none of which you will ever get back because anyone renting a house has no money to begin with (or they'd buy) so suing them just wastes more of your money.

Then your house sets empty while you pay your monthly mortgage payments...then you rent it again and start the money losing cycle all over again.

Renting sucks unless you have a bunch of houses that you paid cash for and have a company handling all the maintenance and finding renters for you. If you actually need guaranteed money coming in each month to pay the mortgages on your rentals, you'll be bankrupt in a year.

Flipping houses is much less risky. You buy a house in a neighborhood that is on the way up, where everyone is restoring the old homes, you put a little money into it, and you sell high a year later to make a quick 20% profit. If you can actually do the work on the house yourself or can put together a cheap contstruction crew to repair houses for you full-time, then you can make even better money at this.

Of course, you need to be able to afford to lose money on a house too, because sometimes neighborhoods that are getting reclaimed take a turn for the worse and every one that was restoring their houses gives up and moves away, leaving the value of your house the same, so you lose money even if you manage to sell it for what you paid for it (considering the high fees you pay when you buy and sell real estate, especially if you use a realtor).