House flipping is another form of real estate investment in which a property is purchased, repaired and later on sold at a profit. However, there is a group of individuals who have it in mind that flipping houses is a reckless job and even associated it with laziness. We will demystify this so called myth in this piece by highlighting the effort that goes into flipping houses.
What is House Flipping?
It is a business, where being used to buy a certain house, renovate it and then selling it for profit. Borrowers known as flippers tend to acquire a building whose value is comparatively low and or one that requires repairs then selling it once it has undergone through a process of renovation. Hence the objective here is to sell the property and make profit as soon as possible.
Why Do People Think That Flipping Houses is like Living in Sloth?
Other people think that flipping houses is rather stay idle because they tend to think that people who engage in flipping only purchase homes and then resell them. They may think that flipping homes is a form of ‘stumbling on riches’ and little work is needed.
On this, I would like to disagree in the strongest terms because that could not be farther from the truth. House flipping is not an easy thing to do and as such, it takes a lot of effort to undertake it.
Flipping houses or house flipping is becoming a common practice in our society today and this article gives an insight into the real picture of this investment avenue.
House flipping can therefore not be categorically described as a get rich quick business. It means that it takes a lot of time, money and efforts to reach such result. Here are some of the challenges that flippers face:Here are some of the challenges that flippers face:
Finding the Right Property
When sourcing property to flip, one may experience a lot of headaches. The specifications that flippers require in order to get good returns include identifying a property whose market price is below the actual value or one that requires some renovation in order to fetch a good price. This calls for knowledge and experience in real estate business with a view of evaluating the capacity of the property.
Financing the Purchase
Flippers have to have the cash to buy the property and it fixes it up so it is move-in ready in a relatively short period of time. This may involve get a loan or identify an investor to finance the project and or partner with in the project. Flippers also need to avoid overspending on the flipping process such as through spending a lot of money on making the house more attractive or even incurring unnecessarily high expenses for a renovation.
Making the Renovations
Refurbishing involves needing a lot of effort and skill in order to be accomplished. Flippers require contractors and tradespeople to turn houses to beautiful homes that can be sold or occupied on time and within a given cost. It is also necessary to control the process and ensure that the work is the best for the building’s new look.
One of the most important key activities in any real estate business that aims at generating outstanding returns on investment is marketing and the subsequent sale of the property in question.
Once a flipper has finished a renovation project, he or she has to source for buyers to finance the property. This involves having the necessary expertise in real estate market and the market prices in order to put the right price on the property. Another important factor also that flippers have to involve real estate agents as well as other professionals to ensure adequate marketing of the property is done.
Risk Management and Other Emergent Issues
There is much risk that is involved in flipping houses which have been identified above. It means that flippers should be ready with contingencies in case of renovation hitches, for example, the time taken to complete the exercise or shift in trends in the real estate business. They also have to balance their capital well so as not to lose on the investment they make.
This process of flipping houses is not an easy one at all as most people think it to be.
It is to be noted that flipping house is not a ‘get-rich-quick-scheme’ or a money-making machine. It is a time consuming as well as money consuming process that also demands a lot of effort. Here are some of the key tasks involved in flipping houses:Here are some of the key tasks involved in flipping houses:
Carrying Out a Short Study On the Real Estate Market
This means that flippers have to be conversant with the existing market trends within the area. It is important for them to find out more about the popularity of certain zones, which type of real estates get the most sales, and which prices are suitable for buyers.
Finding the Right Property
Rather than waiting for a property to be sold, flippers have to look for one that will allow them make good profits. This includes evaluation of several properties, their worth and the prospect before evaluating the properties and making bid for the right property.
Securing Financing
It is, however, important to note that flippers require cash for the purchase of the property and carrying out of the improvements.
