If you plan to become a house flipper or are relatively new to this extremely rewarding yet demanding field of work—or if you’re an investor looking to make a fortune from investing in real estate—you may have some perceptions about house flipping that may not be entirely true.
Here are some common misconceptions that will help you gain a better understanding of how flipping actually works, which is quite different from how it’s depicted in reality shows.
It’s easy to find fixer-uppers to flip
Regardless of what you’ve seen on TV, consistently finding houses that you can flip for a handsome profit is easier said than done. It involves a lot of work and a lot of money spent on aggressive advertising targeted at motivated home sellers who would want to sell their home as-is for an instant cash deal.
A seasoned house buying company or independent flipper takes into account several factors when shortlisting investment properties as there is no scope for costly mistakes in this profession. This means that, unlike what industry outsiders seem to think, finding the right property can sometimes takes months on end.
Flipping homes is shortcut to riches
In the world of real estate, there is no shortcut to big bucks. Most people think that flipping homes is as easy as finding a run-down property, acquiring it for peanuts, fixing it and then selling it for a fine profit. This view does not take into account the nitty-gritty and challenges involved.
The profession of buying and selling homes is an art that requires consistent hard work, eagerness to learn from past mistakes, an appetite for risk and a keen eye for great deals.
Your profits are just a couple of months away
You may believe that buying, refurbishing and selling a home is just a matter of months and therefore base your decisions on the myth of quick turnaround; however, the reality is that every house that you flip will likely throw up some surprise or other in the form of unexpected repair work, contractor issues, processing delay, completion delays, and so forth.
Then there is the task of finding a qualified buyer who’d be willing to pay the price that will not only cover your investment and repair costs but also leave you with an enviable profit. Seasoned real estate investors, such as the leading Warren-based home buying company Return on Investments LLC, know well to take into account these issues when calculating their ROI.
Your profit estimation is foolproof
Inexperienced house flippers often make the mistake of overestimating projected profits, as they fail to take into account the various additional costs associated with buying a house, such as closing costs, insurance, unforeseen repairs, advertising, maintenance expenses, and so forth.
As a result of miscalculating expected profits, they tend to buy fixer-uppers for a higher price and end up incurring losses. To avoid making this mistake, take the time to first learn the trade from an experienced flipper.