It wasn’t long ago that reality TV was full of real estate news programs that showed people buying and selling fixed up properties for profit. Everyone from professional developers to the newlyweds down the street were happy to be filmed as they made progress, made mistakes, and made money – or not – in their attempts at flipping real estate.
If you have indeed spent considerable time paying attention to the ups and downs experienced by these folks, you’re well aware that even the moneyed professionals get involved in projects they wish they hadn’t.
The trick to a successful flip is finding a house at a price low enough, using as little money as possible to fix it up, and then turning it over quickly for a profit. Easier said than done! If you can handle a lot of the work yourself, great. If you can handle the huge expense of hiring contractors, great. But the minute you start paying a contractor, your profit plummets. In either case, this isn’t the time to learn how to use all the tools in that tool box that has done nothing but collect dust in the garage.
For instance, a good flip would be to purchase a house for about $50,000. Plan on $110,000 to fix it up. (You need to either have this money, or get a mortgage. Just remember that no matter what happens, it’s your responsibility to pay the mortgage!) Hopefully before your first mortgage payment is due all the work is done, and the house will sell. Let’s say it sells for $190,000. Your “profit” would be $50,000.
Now take all your expenses out of this $40,000 (closing costs, broker fees for the sale, and maybe even some mortgage payments you needed to make because the project took longer than you had planned).
If you really want to try flipping real estate, here are some things to consider before taking the plunge. Your goal is to not pay a mortgage payment. Do the rehab in less than a month. This is not the time to learn how to do things yourself; hire professionals you can trust if you.
Don’t go into a flip with a tight budget, no experience, and already having money problems. Flipping real estate is not your answer.
This article presented for you by these two sources of real estate news and flipping real estate tips.
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