Posted On 19 Aug 2018
Author: Andrew Holmes Real Estate
If you are interested in real estate investing, there are many ways of making money. One of these methods is called house flipping. This strategy of earning profit from real estate has become very popular because of realty TV shows on HGTV and TLC. However, like other real estate investment methods, house flipping has its own pros and cons.
House flipping has potential of big profits
Buying a house at less than its fair market value, renovating it to make attractive for potential buyers, and then selling it at a high price is a strategy that can yield substantial profits. If done properly, you can earn profit equivalent to median household salary from one transaction.
House flipping can be a great learning experience
Even though the primary motive in house flipping remains profits, you gain lot of experience in bargaining and construction. You renovate the house to increase its value. Flipping also teaches you valuable lessons in local housing market. You learn to find distressed homeowners and properties that can yield higher returns. You learn about unexpected costs in repair. Finally, flipping teaches various aspects of short sale and foreclosure to you as a real estate investor.
It helps in building your network
You make many new contacts in real estate industry while doing house flipping. It is an exercise that requires coordinated efforts of several professionals like attorneys, contractors, realtors, and other investors. As such, house flipping helps you in growing as a real estate investor.
Chances of losing money
It is common to see individuals losing money instead of earning profits from some of their house flipping endeavors. There can be many factors to turn flip into a flop form higher purchase price, unexpected high repair costs, and costs incurred on holding the property for a long time.
Long and tiring exercise
If you are attracted to house flipping because you can make quick profit from it, you are mistaken. It is a very stressful endeavor that requires lot of patience. Renovating a house to make it desirable for buyers is not an easy task. Try your hands in house flipping only if you have reliable and honest contractor in your team.
In the end, it would suffice to say that house flipping can be a profitable real estate investment strategy if you are willing to learn from your experience. Don’t expect quick returns and bide your time.