Flipping Houses for Fast Real Estate Profit
One of the rising stars when it comes to real estate investment is known as ‘flipping’ properties. This works by buying properties that are in need of either minor cosmetic repairs or in need of serious renovations, doing the work, and selling the home for a much greater price. In theory, this brings in a significant amount of profit in a rather small amount of time. This is the case for many who attempt to flip properties but it takes a little more than the idea in order to make the process work. For this reason, there are many who end up sacrificing profit or losing money in the process when plans aren’t well conceived.
Fixing and flipping properties is one of the quickest ways in which investors can turn a profit in a short amount of time. Unfortunately, this once closely guarded secret has gained some degree of infamy and there is fierce competition for the undervalued properties on the market as more and more would be investors decide to throw their hats into the collective ring. Like any successful business, the “secrets” are really common sense approaches to being successful.
1) Treat this as a business rather than a hobby. Far too many investors do not take their investments seriously. This is a mistake because in this business time is money and every month that the house isn’t sold is a month that the house is costs money. Create a plan, make a schedule, and stick to them.
2) Remember that this is a business and the purpose of any business is to turn a profit. Be confident in making low offers. The ability to buy low and sell high is the lifeblood of this particular business. This means that offers for purchase may not be accepted because the owner often place emotional prices to their homes that are simply not economically feasible. Move on.
3) Pay attention to the market. This is vitally important. Many ‘flippers’ lost their shirts in the recent near collapse of the housing market across the country. The truth of the matter is that the indicators have been building for years. In cities where there was once a shortage of viable housing options there are currently surpluses. This does not drive the value of properties down so much as it brings them back to their proper values. Investors that were counting on an ability to sell above the actual value of the property were left holding the bag (or rather notes) on these properties for quite some time until they could be sold. Some never managed to sell these properties and were left dealing with the expense in addition to the costs of the upgrades. Do not buy in an inflated market if it can be avoided unless it is during the very beginning of the inflation (before property developers have the opportunity to create a surplus).
4) Do not allow flipping a property to become personal. Far too many first time house flippers decide to create a work of art rather than a business investment. It is tempting when making cosmetic and structural repairs to go ahead and create a dream home. The problem with this is that depending on the particular market certain improvements costs are unlikely to be recouped. The goal is to invest little and profit large. Granite countertops are lovely but not at all necessary in a neighborhood filled with those of humble means. Cater to the tastes and budgets of the target market rather than personal tastes.
Despite the risks involved in flipping houses as a real estate investment there is no denying that fortunes have been made doing just that. Even in the current housing market there is a great deal of promise available to those who can do the work quickly and inexpensively. People still want to buy these lovely homes rather than buying a home that needs to be made over after the price of purchasing.