The concept of “easy money” is one that many Americans grapple with. We watch television shows and mistakenly believe we can do exactly what they are doing and make the money they are making with ease. Home flipping is a huge industry, but it doesn’t mean that it is easy to do or to make money. Is home flipping truly worth it? This article will give you some insight into what you need to know to become a successful flipper or to decide to take another route.
You need know-how
Flipping a home isn’t just about buying a run-down home, putting time and money into and moving along. You need to know the market, what homes are selling for in that location and what potential problems you may face. For example, overbuilding for the neighborhood can be a common problem for flippers. Sure, the home is decked out with a beautiful $100,000 kitchen, but that won’t help you when the maximum purchase price on the street is only $200,000. Examine the max price per square foot in the area before assuming your renovations are going to net you a large profit.
You need money
To start, you need money to invest into the home, whether that is from your own savings accounts and loans or from other investors. Not only will you need the purchase price of the home, you’ll need money for the renovations, the labor and the time you’ll spend in the home paying the bills (property taxes, electricity, water, etc.). You should also have a large contingency for when things do go wrong (and they will) that are out of the scope of your initial renovations. If you are getting financing, don’t forget that you are also paying interest on this money until it is paid. If you are not a real estate professional, you’ll also have to keep these costs in mind for when you sell the home. Once you add up the costs of doing all the work, along with your target selling price, is the profit worth it? Only you can decide on that.
You need time
Flipping a house takes a lot of time. Once you get possession, you can see what exactly is behind the walls and under the floorboards and make your plan for renovation. Getting permits and inspections all take up time and are a lot of waiting that you might not have thought about it. If you are doing the work yourself, consider your time commuting back and forth to the home, along with getting supplies. Once the home is complete, you need to consider that it could possibly sit on the market waiting to sell, while you pay the bills. Is the time you are going to spend flipping the home worth the time you aren’t working at a different job?
You need skills
Having to pay professionals to get the work done can get expensive. Sure, you can put in your sweat, blood and tears, but if you don’t know how to do the wiring, you may be using a pretty penny towards an electrician. Be sure you know how to do the basics before working on flipping a house or it won’t be worth it.
Only you can answer the question if home flipping is worth it. Do your research and then talk to your real estate professional about homes that will qualify for a re-do.