With a hot real estate market over the past 10 years, along with hit TV shows, flipping properties has caused quite a stir. But, is it really that easy to make a bundle of money? Let’s take a look.
Flipping properties has a simple approach. You buy a home that needs some renovating, fix it up as quickly as possible, and sell it for a profit.
While that may work in some cases, there is also a flipside to the equation and it is these factors that will determine your success.
1. Do you have the time?
Unlike the half-hour TV shows, real life house flipping is really a full-time job. It’s certainly not a part-time hobby. The people you see on TV are doing this full-time. They are professionals. To think that anyone can just get started doing this on a shoe-string budget is going to fail.
To get started you’re going to spend a great deal of time finding a suitable piece of property. This involves researching and driving through neighborhoods. Once you do discover a suitable home you’ll be spending a substantial amount of time with the purchase agreement. Keep in mind that this involves closing costs, fees, etc. It is a regular home buying process.
2. Getting the work done.
Next, you have to coordinate all of the renovating work. Getting estimates and bids on the work can be time consuming and aggravating. If you’ve ever had work done on your home, such as a new roof, or having a bathroom remodeled, then you know how it can be. Getting individual companies to come out and give you a bid can quite a hassle.
You’ll may need a contractor on bigger projects and that can be a headache of its own. Will they finish the renovation on time? Even better, will it be within your budget? You should plan for delays and cost overruns because inevitably things will go wrong. For example, you may find hidden areas that suddenly need major repairs, like flooring, roofing, or plumbing. Not only will this add time to complete the renovation, it also means a lot more out of pocket expense.
3. Selling the home.
Finally, you’ll need to spend the time and money on selling the house. The longer you sit on the home the more money you lose. Remember, you have to pay all sorts of fees, taxes, appraisals, insurance, as well as the mortgage payment until you are able to sell the home.
If you’ve ever sold your home then you know how involved and time consuming it can be. You’ll need to advertise, have open houses, and be able to show the home to potential buyers on their schedules, not yours.
It is for these reasons that flipping properties is a full-time job that shouldn’t be undertaken by just anyone. You have to know what you’re doing or you can easily lose your shirt so to speak.
I’m not saying that house flipping doesn’t work; on the contrary, it works very well for many people. But, you’ll need to have experience, patience, and the financial backing to get started. The bottom line is that watching people flipping properties on TV is entertaining, but trying to do the same thing isn’t everything it’s built up to be.