House flipping is a real estate investment in which an investor buys a property and refurbishes it with the intent to sell and make a profit. Before committing yourself to flipping a house, it’s essential to understand what you can gain and lose from the project. It’s a risky investment, but, if done correctly, the reward is great. Weigh these pros and cons when making your decision!
Benefits of flipping a house:
- Quick profit. When done well, flipping a house is a large profit equivalent to the U.S. median salary.
- Construction knowledge. You will begin to understand the ins and outs of construction, including remodeling, repairing and renovating a house, as well as spotting mold or knowing the cost of electrical repairs.
- Real estate savvy. Do your research on the location of your house and the typical design elements in the neighborhood. Once the house is up for sale, you’ll realize what potential buyers are looking for.
- Cost expert. You’ll gain insights into how much it costs to flip a house, the unexpected costs that might arise and how much profit to expect.
- Seeing your creativity come alive. Get a sense of satisfaction as your vision for the house comes alive. You were one of the few people who saw potential in a house and ran with it. It is a unique gift. Embrace it.
- In this business, you will meet and encounter people from different professions, with different strengths who can help you in the future. Networking and building your connections is key. You never know when you will need a contractor or attorney.
Drawbacks to flipping a house:
- Losing money. A major concern when flipping a house, taking a hit is the opposite of why you got started. Take note, below, of some reasons people lose money when flipping houses.
- Unexpected costs. Footing the bill for things you hadn’t planned is the most common way house flippers go over-budget. With time, you’ll learn how/when to anticipate more of these unexpected costs, which include work delays, permits, tax hikes, holding costs and difficulty selling the house.
- Stress. A lot of work, time and effort goes into flipping a house. Between working with contractors, figuring out costs and selling the house, flipping a house can be stressful. Planning a smart budget and working with trusted contractors can help ease some causes of stress. But at the end of the day (or sale), you have to know if your personal and financial investments are worth the reward.
Are you in the market for an investment property – to rehab, resell or rent? Get in touch with a member of our Housing Buzz Team today to talk about the best ways to finance your investment and plan for a project well done.