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Three Hard Truths about House Flipping as a Career

Posted by Ken Meyer on Tue, Feb 07, 2017

 fix and flip financing

There are innumerable individuals that have made a fortune by buying and selling real estate. It is literally the type of thing that has made some of the lucky ones overnight millionaires. House flipping has gained huge popularity recently due to this potential for success. There is even a myriad of television shows that follow investor's experiences from finding a suitable property through the renovation process, and finally the flip. It's exciting to watch, and they claim that just about anyone can do it. If you're thinking about jumping into the fix and flip world, however, you need to understand these three hard truths about house flipping as a career.

 

Budgeting Capital

Most fix and flip investors do not have an endless amount of capital that they can tap into to purchase, and rehab a home. Instead, they borrow money from a hard-money lender, or a traditional bank or credit union. In either case, the investor must have a certain amount of capital on hand before the loan will be granted. The most experienced investors know that budgets can easily be thrown off by unexpected repairs, or additional work, so therefore, plan accordingly. Oftentimes, however, costs simply offset profits, making it tough for investors to make acceptable margins.

 

Scheduling Issues 

Very often, investors have a set date in mind when they expect to see a return on their investment. In some cases, it may be a month, other times, it's a few months. At any rate, it's important that every person involved with the renovations works together to meet the deadline. This is a difficult task, especially when dealing with multiple trades, materials delivery, the weather and a host of other issues. The truth is, most projects simply do not get accomplished within the time that was originally expected. While it helps to have experience, sometimes, it's just a matter of continuing until the job is done, and absorbing the extra costs. It's akin to on-the-job-training, and every investor goes through it.

 

Delayed Sale 

Let's assume that an investor purchases a home, completes the repairs and upgrades on time, and within budget, and puts the house on the market at a fair price. One may expect it to be scooped up immediately, for the asking price, done deal. The reality often looks much different, however. It can take weeks, or even months, to find a buyer for a home in any given market. This is due to several factors, from the location of the home to the number of bedrooms to the local economy to the time of the year. This is why successful fix and flip investors often have several properties working at a time, it minimizes the impact of one property sitting on the market.

 

If you're serious about a career in fix and flip real estate investing, you're going to have to be tough, agile, and adaptable. You could spend a lot of time, and money, and lose it all. On the other hand, you could invest a small amount, and reap huge financial rewards. Contact us at Trust Deed Capital if you want more information. We are a hard-money lender that works with experienced, and novice, investors to fix and flip homes and we know a thing or two about how hard it can be. However, we've learned a few things over the years and we're more than happy to pass them on to you.

 

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