People mistakenly believe that those who make money on a consistent basis with real estate are flippers. Nothing could be further from the truth. True real estate investors actually buy real estate investments with the intention of keeping them for rental profits. Consider this: imagine you are a farmer. And you had 4 cows. Each day you milk the cows. You take that milk and sell it. This is a pretty much guaranteed income. As long as your cows are alive and milk is coming out of them, you got yourself a "cash cow."
One problem though. Every once in a while a inexperience farmer or actually we'll call them a "butcher," takes those cows, kills them, slices them up, and sells its parts. The problem, you ask? Once the cow parts are sold, you won’t make another dime from that cow.
What would you rather have: a check every month from your milk (tenant's rental payments) or a onetime sale (money from selling the cow parts)?
A flipper is a butcher. They just want that one time sale. Butchers and flipper get punished. Hard. How?
1. Capital Gain Taxes
Uncle Sam doesn't give flippers breaks. Profits are eaten away when you resell a property. On the other side of the coin, Uncle Sam loves real investors who keep them with a lot of tax breaks.
2. Holding Costs
Nothing is guaranteed in life. Same applies for a getting a property investment sold. At least sold quickly. Do you like paying out of pocket costs before actually making money? If you can't sell the investment property on time (that you're intending to flip), you're left holding the bag. A bag full of mortgage payments, insurance costs, maintenance costs, property taxes, and on and on.
3. Banks Hate You
Banks don't give great loan terms for those intending to just resell a property for a quick profit. They realize there is a lot of risk involved. Investors get good terms because they're already have a business plan lined up with the property (the tenant's income that pays for everything). While real estate flippers are butchers with a gamblers mentality.
Just remember real estate flippers are not considered investors. Investors want the cash cow, milking out money every month, not just one time.