Understanding the Intricacies of Property Flipping by Jeff Adams
For any property flipping investment to be successful, real estate investors need to have specific goals and strategies in place. Once the property is acquired, there are many decisions you can make to modify the new home. This is so that it will appear satisfying and appealing to home buyers.
Property Flipping Explained
Property flipping is a promising ‘exit’ strategy used by investors for already acquired assets. This means that the investor, after having purchased a property, ‘flips’ it back into the market for a resale.
Flipping is commonly used for foreclosed properties which are given a dramatic facelift to make them marketable assets once again. Usually run-down properties are purchased at lower rates and revamped to somehow increase their value. Property flipping is a great investment idea for first time as well as seasoned investors because it assures good profits on nominal investments.
Depending on the status of the real estate market and the economic growth, investors choose to retain these assets either for a short or long term. The short term approach lasts between four to six months, while the long term strategy is used when the housing market is poor, and investors have to wait for the real estate market to revive.
Why Flipping is ‘In’
The trend of property flipping is back in the US after its markets revived following the 2008 economic meltdown. Today, house flippers are back in the business with even greater gusto and are buying properties at less than the market price, giving the run-down property a makeover and reselling it for a whopping deal.
Believe it or not, but flippers in the US have reported a 14-20% increase in rates, with an assured profit of $50,000 per property. Interestingly, as with all good things, flippers now have to find more creative ways to deal with the competition in this dynamic market of flipping.
Dos and Don’ts of Property Flipping
Property flipping as a strategy requires some seasoned planning and diligence. The following dos and don’ts of property flipping will help you bag a bigger and better deal!
· Purchase at the Right Price
Don’t go overboard with the budget, spend just as much as you can afford, because while remodeling the house you will have to shell out additional costs.
· Make the Property Worth Buying
No one wants to purchase dilapidated or damaged homes. Thus, it is your duty to make adequate upgrades and make the property worth buying.
· Do your Research
Inspect a property through and through before sealing the deal. Often things might not appear as they seem, and you might end up spending enormous amounts on fixes like plumbing or electricity repairs.
Part of your research should also include gathering information about the neighborhood. Take note if the property is close to a retail outlet or a school. It’s often difficult to sell properties which are not part of a ‘friendly-neighborhood’.
· Check your Permits
The norms for property flipping are different in every state. Understand the flipping scenario and its required licenses or permits before investing money.
· Have a Backup Plan
No matter how great the property you have chosen is, always have a backup plan to sustain you in the event that things don’t work out as planned. If your property isn’t selling, a great idea is to offer it on rent.
Flipping is a great investment idea, but one that requires careful planning and in-depth research.
