Reselling a house that you have recently purchased can be a lucrative endeavor but it is one that is also fraught with many financial dangers. Many real estate investors have heard stories of people who have purchased homes and sold them again within a few weeks with little or no effort for a substantial gain. While those stories may have been true for a select few in the recent past, those “easy” deals are all but gone.
These days, it takes a lot of expertise and experience to know how to successfully flip a house. Here are some basics that you should understand before considering this investment:
The Property – Getting the property at the right price should be high on your priority list so that you can still sell it at a substantial discount. Otherwise, it may turn into a rental until the market recovers enough and you can recoup your investment.
The Neighborhood- The first consideration is whether the neighborhood is improving or deteriorating. This single fact will often determine whether a “flip” strategy will work. In a worsening neighborhood without demand, there will simply be no buyers for your house. To the contrary, in an improving area, the land value of the property may be enough by itself to justify a flip approach.
The Market – An external consideration is the overall state of the real estate market in your area. The property you are flipping may offer the best deal in the world but potential buyers without the capital or other financial resources will simply not be able to avail themselves to the opportunity.
The Repairs – Do not discount the amount of money it will take to rehab a property. You cannot simply bring it up to your standards of livability. Any major rehab project will involve local inspectors who will insist that all aspects of the house meet the current building codes. This can be especially expensive if you must redo either plumbing or electrical systems.
Your Needs - As you can see, flipping a house is not as simple as it seems. Ensure that you enlist the aid of reputable experts such as contractors, inspectors, appraisers and financial pros like private money lenders. These individuals can mean the difference between finding a respectable investment and being saddled with a property that you don't really want.