By Yadire Mendoza
The term of “flipping homes” has become increasingly popular over the years. The concept of flipping is to buy a property at a discount, and in return to fix it up to bump the value up and resell it at a greater value within a short period of time. Even now during this recent housing crash there is still money being made in this market. Just last year the National Association of Realtors recorded that almost 1 million homes purchased for investment purposes. This shows that real estate is clearly always a good investment when properly done. It can be a very risky business and not all people who attempt are successful. The fact that it is risky also makes it complex and to successfully gain a profit there are several component s to consider when looking into an investment like this.
To be successful in this field there are some steps to follow in order to assure a profit return. The process generally, begins with first looking for the right home that is priced right. It must be at a bargained rate and with potential to increase in value with some repairs. Then, adding value to the home is typically done through operating efficiencies, upgrading and cosmetic repairs. Finally, selling the home within a short period of time, at a higher price than what the initial investment was.
The factor of location being the key to a successful business, also applies to this home flipping process. The area in which the home is surrounded by is everything to the value. Being next to a good school in a good neighborhood is going to be an attractive sell to a buyer with a family. A home next to a college that has quick access to grocery stores, coffee shops, fast food restaurants could be ideal for students or a first home buyer. It is important to do the research on the surrounding area and ultimately what the house might have to offer in value.
In order to make this a living and solely depend on this income you must continue to turn around and repeat the process. It will only work if you keep investing the profits gained into another property that could possibly get you more. In return that is how you build your funds. It is also very important to know how to manage the money. The property itself needs to make “sense” and “cents” therefore, being very particular of the home and how the money is getting spent to improve it, is critical in gaining a profit.
To break into this type of business an individual with a mentality to see the bigger picture is required. Patience is highly necessary to gain success in these types of investments. Although, the flipping process has been termed as quick money, we must not forget that quick money goes even quicker when not making wise investing decisions.
Diaz, Julian III and J. Andrew Hansz. Real Estate Analysis Environments and Activities. Iowa, 2010.
Inman News. Real estate flipping declines in California: Report cites fewer opportunities for fast money. Retrieved Tuesday, August 29, 2006.