Are you a house flipper or a house flopper?
Whether you're a home professional or not, you can run into some problems when you're flipping houses. You may think that the trouble isn't worth it if you're a beginner and you may become discouraged by the failures if you're a professional.
Flipping houses has many pros and cons that everyone - no matter the skill level - should take into consideration. Keep reading to learn about the pros and cons of flipping houses.
Flipping houses can draw in a huge profit. That is if the project is successful.
Any sort of improvement on a house can increase the value if it's successful. Whether it's a new coat of paint or an updated oven, your home's value can go up.
Many people have turned flipping houses into a profession because of the rate of return on the work.
If you do this, you should keep in mind that the profits that you make are going to be put towards flipping the next house. However, you should still get a good rate of return on that next project and the money will add up over time.
As you make profits, be sure to keep your budget in mind. You don't want to miss setting aside money and find yourself in debt.
As you do more projects over time, you'll become more experienced in flipping houses. The more experience you have, the better the outcome will be over time.
However, this doesn't come free. As you're learning, you'll make mistakes and have a flop rather than a successful flip. These flops are the things that you'll learn the most from though.
As you perform many renovations and remodels successfully, you'll also become faster at doing them. This means that you'll make more money in a shorter amount of time.
You'll also gain experience in important home improvement trades.
Much of the house flipping process involves learning different trades. The most obvious one of these trades is construction, but you may also learn about plumbing, electric, and other trades.
Eventually, you may gain so much experience that you don't need to hire a specialist. This will not only cut down on your costs but also make you more money in the long run.
You should make sure that you're completely comfortable with completing specialized tasks on your own before deciding to go it alone. If you make a mistake, you may end up paying more to fix the mistake than you would've if you simply paid for the specialist.
Unless you have a real-estate master as a partner, you're going to need to familiarize yourself with the top markets in your area. You should perform local market research on the house before you buy it.
Even though you're going to be flipping houses, you should make sure that you're buying houses that you can gear towards the market. If people in your area are buying modern homes, you should make sure that you can modernize the homes that you're flipping. If not, you should buy a different property.
Understanding market research can be difficult. You could use some of your funds to hire a market expert or you could complete into the research yourself. Either way, it may take some investment.
An easy way to keep up with your local area is by reading or watching the news.
As you flip more homes, you'll learn what buyers like to see and what they don't like. You can gear these insights towards the next properties that you want to flip.
For example, you may find that a buyer didn't like a closed-concept floor plan that one of your houses had. If you see that this is a trend, you may want to make the next houses that you flip into open-concept homes.
These buyer insights vary from area to area, time to time, and family to family. It's impossible to make the perfect house for every homebuyer. However, insights into area preferences can tell you how you should go about remodeling or renovating your homes in the future.
We hope that you're leaving plenty of room in your budget for every single project that you work on. You never know when something could break, turn out wrong, or completely flop.
As you flip more houses, you'll learn to budget better. You should also make sure that you're not budgeting too little. If anything, you should budget more than you think you will need for repairs.
As you become more experienced, this emergency buffer may become smaller because you'll be making fewer mistakes. If you're a beginner, leave a wide-open space for plenty of mistakes to be made.
Your budget will also include the cost of buying the home that you need to flip. Unfortunately, a lot of homes have underlying costs that buyers may not know about.
Whether it's old codes or broken pipes, you may find that there are many hidden costs. These are the kinds of things that you need to take into account on your budget sheet.
When in doubt, assume that something will be broken.
You could also hire a professional to look at the house and let you know what any underlying costs are. However, this would be another cost to take into account.
The more that you learn about flipping homes, the more that you'll learn about how the real estate industry is involved with selling those homes.
Just like we discussed with local demand, you may consider hiring a professional to work with to help sell your homes. However, learning how to do this yourself will save you money in the long run.
If you're looking to buy homes like those that were foreclosed on, you'll find that you need to learn more about real estate financing options. You should ask for help understanding this in the beginning, but you'll want to understand it well for taking over the process in the future.
House flipping also allows you to grow your network quickly. Whether it's the professionals you're working with or the people that you're buying from or selling to, you're going to be interacting with and meeting tons of people.
Your professional network will inevitably grow as you flip more and more houses because of these connections.
Your work with specialists and experts may give you deals on their work in the future. You may also build an on-going, long-term friendship with the company or companies that you choose to hire.
Your network with other home sellers may come to help you with buying houses in the future. Those who sell houses for a living may come to know you well if you buy multiple houses from them. This relationship may turn into future discounts and first-looks.
Your relationship with house buyers can lead to more business in the future. If your customers are happy with your work, they may refer friends to buy your houses or employ you for their projects.
Flipping houses takes a lot of expertise, skill, and creativity. You may feel disappointed with yourself when you're first starting, but you'll start to feel a sense of pride when you become better at grasping onto the profession.
Pride for your work is going to take time, especially if you're still in the stage where you're taking a long time to do small changes. Many people quit this profession simply because of how difficult and time-consuming the practice is.
However, you'll get a sense of accomplishment over time.
You may also notice that your customers will enjoy your work more and more as you learn how to flip a house. They'll see the improvements and come to appreciate your hard work.
Because of all of these factors, house flipping tends to be a very satisfying line of work for those who are patient enough to make it through the steep learning curve.
Going On With Flipping Houses
Now that we've covered the good and bad of flipping houses, you can make your choice on whether or not the profession is the right one for you. You need to have a strong will and strong hands.
If you're ready to dive into the wild world of house flipping and you need some houses to flip, feel free to check out our 3D home tours. You'll be able to decide on your favorite flip-able houses from the comfort of your couch.
For more on the recent world of real estate, discover how the coronavirus is affecting the real estate market and what this could mean for your house flipping business.