Here are some tips on how to flip real estate the right way and pitfalls to watch out for.
Flipping takes time. Most people allot as much time and input as possible to ensure their dreams are realized, when choosing to attempt to do house flipping.
Alternatively, they naively believe that the real estate business is just merely a hobby or something that takes very little time to do.However, these are completely unrealistic perceptions.
It is imperative to buy a deep, twenty-five percent or above discount because such discounted properties supply is small, and the time investment and need to work exceptionally hard are high.
When investing using the "Buy and Flip" approach, most beginner investors anticipate a minimal time for property hunting. Contrary to the television show portrayals that show abundant "fix-em up" properties and investor time spent doing property repairs and sales preparations, the reality is quite the opposite.
To make a profit with an investment, a lengthy property search is essential to get the best deep discount. Once achieved, you can make the needed repairs and get the property back on the market.
Costs can get out of control. Theres a reason why large discounted properties are discounted. This is mainly because extensive repairs are needed before making a profitable sale, and many misinformed beginner investors envision the fruition of major changes as seen on television.
They fail to see their primary goal as creating a comparable property to others nearby, trying to make theirs even better. Needed repairs are different to property remodeling. When calculating property improvement and repair costs, always do this in regards to upgrading to the equivalent of the areas other properties.
Most flipped houses seen on television have undergone exterior, kitchen and other additional changes. Made for TV investors are not investing large monetary amounts in "real life" changes. Such extra improvement and repair costs eat away at profits.
Putting in a swimming pool to increase the property value is unnecessary compared to fixing a leaking roof or broken window. Ask yourself: what improvement or repair will create a profitable property sale?
The house flipping business is stressful. Profits disappear each day that the property remains on the market because profits are calculated post-sale. Selling a property quickly can give you a headache.
The three common stressors include:
1. Using a real estate agent to help find more interested property buyers reduces overall profits.
2. Holding costs (mortgage payments, advertising costs, utilities, etc.) rise each day the property remains unsold, further reducing profits.
3. Choosing the appropriate time to lower the asking amount or use a real estate agent to market the property some profits will be lost to the agents commission.
Beginner flippers can find this stress overwhelming, but by knowing the expectations of real estate success, they can plan ahead.
Some properties are difficult to sell. Sometimes a discounted property needs more complex repairs or has repairs that are not fixable. Factors such as a bad neighborhood, proximity to a busy road, or being on a steep slope can result in finding a discounted property, but make the property sale harder.
Avoid properties that are hard to sell. "You need to make sure that you understand the issues and get enough of a discount when you buy, so that you can address the problems and still profit when you sell. If that just isn't the case, it may be in your best interests to move on to the next property."
Unexpected costs destroy profits. To avoid unnecessary property purchase surprises, hire an inspector during the contract finalization process. The inspection will outline both known and unknown problems, helping you to prepare for repair costs and hire needed workers to do the jobs, but more importantly, the opportunity arises for further negotiations to possibly secure more discounts to deal with these additional costs.
However, when these problems are put to a seller, they may not agree to fixing them, giving a better property discount, or giving you additional compensation. Under these circumstances, if there is no maneuverability within your top purchase price (most you can pay to make a profit) for these costs, you may need to abandon the property purchase.
Its okay if you still want to try house flipping. Just understand what is expected and how to: calculate an investor discount (minimum); recognize a good property; locate them; determine the top purchase prices; make proper offers; and be a master negotiator.
No television program can portray these vital skills to success in a more understandable fashion than this. Remember: dont start house flipping because of glamorous television portrayals.
That guarantees possible problems very expensive problems.
By educating yourself, realistically speaking, you can also find success by investing in real estate.
Copyright 2007 Jimmy Warren. All rights reserved.
Profitable house flipping opportunities exist everywhere as long as you know what to look for and understand how to make prudent deals that transform property into profits. Jimmy Warren, Editor of http://www.houseflippingnews.blogspot.com shows how to make safe and sane investments that ensure a good nights sleep as your real-estate portfolio grows, your properties appreciate and your income increases.