Flipping is a process wherein one purchases a revenue generating asset and then quickly resells it so as to make profits. It is often referred to as a ticket to quick and easy money in the real estate sector.
Makeovers are needed not only by ugly ducklings! Today’s houses are also in a desperate need of a makeover.
An investor may purchase a property which is not in a perfect condition, needs minor cosmetic repairs, is in want of heavy restoration at a relatively lower price and then perform necessary renovations/repairs and sell it off at a premium.
In essence, flipping houses is one of the swiftest ways in which speculators can change profit by bringing in high profit in a short span of time. Flipping generally involves buying the property at wholesale prices, that is, at a price lower than the retail value.
The people who value time over money generally end up selling their spaces at wholesale prices in turn incurring a certain amount of loss.
In this practice, it is very important to keep a few things in mind – One should treat it like a proper business with guidelines and schedules in place. Like any other profession, emotions need to be kept aside while making deals.
Thorough knowledge of the market is essential as it helps determine trends and spot abnormalities. Having knowledge about the market cycle is also essential as it helps predict the future course of action. It is important to recognize the various phases of different market cycles and purchase a property accordingly.
One should look out for genuine deals. Flipping is all about buying houses at cheap prices which then make its reselling a viable option. What may appear to be a decent property may end up costing a great deal after the repairs are done or vice versa, hence it is important to study the property well before purchasing it.
Housing with plumbing and electrical problems are the most difficult to overcome so one should try steering clear of issues like these. Keeping the 4 R’s – remodeling, repairs, renovation and refurbishing in mind while purchasing a house will definitely yield higher profits.
At a broader level, it is necessary to know the area, inspect the home properly, calculate the cost of repairs, know where one can save costs etc.
Thus in order to turn any “ugly” situation into a “profitable” one, one should keep in mind that there should be ample sources of funds/income since flipping of houses is a time consuming process.
And if the source dries up midway, one may end up incurring huge losses. It is important to have quick cash since having money is the key to making money.
In the current market scenario, there is a lot of potential for those who can “flip” the property quickly and inexpensively. A certain degree of patience is required to select the right property.
And then follow its ‘flipping’ according to certain criteria instead of rushing out to hire the first contractor who makes a bid to help. Sticking to the tried and tested route of how things work usually serves to be beneficial and profitable.
By Robert Peters