Real estate investing with “flipping” is touted by many people as a great way to make a fortune relatively fast and with relatively minimal risk (real estate is thought of by many as the best all-around investment anyone can make). In this article we’ll look at real estate investment “flipping”.
According to Investopedia, what is known as flipping is “a type of real estate investment strategy in which an investor purchases properties with the goal of reselling them for a profit. Profit is generated either through the price appreciation that occurs as a result of a hot housing market and/or from renovations and capital improvements. Investors who employ these strategies face the risk of price depreciation in bad housing markets.”
In this kind of real estate investing, real estate investors who are looking for “fast” cash may employ the strategy of purchasing any number of properties using mortgages and then hope their value goes up in only a few months, at which time they would put them on the market and sell them as quickly as possible. Investors who are looking for a longer term investment, however, like to buy properties that are run-down for a low price, invest some money and time into renovating them, and then sell the renovated property for a large profit.
However, flipping is not an easy way of doing real estate investing, although its basic concept is simple indeed. Property flippers are actually working many, many more hours per week than someone on a salary and they don’t stop their business when Wall Street closes either. One thing that successful flippers know how to do is research, and to this end they get a lot of advice from local industry experts, loan officers, construction companies, home inspectors, appraisers, estimators, property insurance agents, and their like. A good flipper also retains an accountant who takes a look at every prospective property and flip idea from the outset. If you’re going to flip properties you will also want to retain a lawyer who specializes in real estate deals.
It is also vital if you want to be a successful flipper that you check your emotions at the door with every prospective purchase of a property. There is a great deal of emotional buying in the business, and what this means for you is people tend to pay too much money for a given home. While this is to the advantage of real estate agents and, potentially to you as a flipper, it is not to your advantage as a flipper because if you do the same thing you are cutting into your potential profits, and maybe by a vast amount.
So, you will have to have a professional mindset and choose your prospective properties with great care and lots of research. You cannot become romantically attracted to a property; you have to base all of your decisions on cold, hard facts and calculations only.
It also is very helpful; if you are taking the renovation road that you have or get some basic home repair skills of your own. This can save you a lot of time, money, and costly mistakes in judgment. So before you engage in flipping as your form of real estate investing, be certain you have sufficient money, time, and knowledge.