Before House Flipping
Who, What, When, Where and Why
House flipping is an exciting, potentially lucrative and short term process,
yet not something for everyone. Because making money in real estate is not
always the easiest endeavor, this section seeks to educate those on what to know
about flipping houses. Reviewing everything from the market to
financial considerations and
how to get started, prepare to learn the ‘who, what, when, where and why’ of
turning over a property for profit.
Who
Firstly, before we review personality traits that would lend themselves well to
flipping, it’s worth mentioning the cash factor. Stated simply, if you can’t pay
for the flip, or have to grossly overextend yourself to do a flip –it’s probably
not worth it. Yes there are people who have put everything on the line and come
out on top, but it’s best to approach flipping with a down-payment and
renovation-ready budget not tied to other investments.
Other than the cash factor, those who would be good candidates for adding value
to a property are those who are flexible, entrepreneurial and willing. In
addition to these traits, it will be easier to swallow the whole process if you
have, or make the time to invest in the project. Those with flexible schedules
can usually get away with shorter-term flips, whereas, those with more
restricted schedules tend to require longer timelines to get the results they
desire.
What
Although everyone’s goal in updating a property is to make money, it doesn’t
always happen that way due to certain conditions like: a bad market, higher
costs than expected, bad planning, etc… To avoid making these mistakes, it’s
important to have a firm grasp on all the elements listed in this section in
order to walk into the house-flipping process with an educated strategy.
When
When, is both a question of the person and the market. For example, the market
conditions may be great for flipping, but the person may have situations in
their life that inhibit them from giving the renovations, budgeting and planning
required for a great flip the time they need. Conversely, the person may be
ready and willing to work on a house, but perhaps the market is flat or
over-hyped.
Where
Where to invest in a cosmetic or large-scale update property is a bigger
consideration than many think when it comes to profitability. For example, the
US, Canadian or UK national real estate averages and outlooks may or may not be
bad, but certain areas within the country could be hot. More specifically,
within a larger city area, some suburbs or neighborhoods may be more flip-worthy
than others. When considering the appropriate location, look into city plans,
events, changing by-laws and the like other than simply a national real estate
outlook.
Why
Why not? Flipping can be incredibly lucrative if done correctly. With the right
opportunity and a good amount of educated risk, flipping can be an adventurous
hobby, secondary income or full-time job.
How
For more information on how to turn over a property, check out
the how to get started section.
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