So, what is ‘house flipping’? Simply, house flipping is when a home is bought by an investor with the intention of being sold at a later date for a substantial profit. Usually, these homes are bought at auction as they can be purchased cheaper, but this isn’t always the case. So, if you can buy cheap with the ability to sell high not too far down the line; then is it a good, low risk investment? This blog post aims to find out.
High Down Payments but Huge Potential
Of course, if you’re buying a house (even one at auction), you’re investment is going to stem into the tens of thousands at the minimum. Due to this, before you even consider purchasing a house with the intention of flipping it, you’ll have to be certain that you have a large sum of cash that you can reinvest. As well as this, you won’t only have to have it available at present, you’ll have to be aware that it will be tied up until the sale, at which point you’ll hopefully get a large return. So, how do you eliminate the risk that you won’t receive this return? Here are 3 top tips of what to look for in a house flip in order to create a good, low risk investment:
- Location: If you listen to any property developer, they will tell you that the location of a property is the most important factor. So look for places with rising house prices or a growth in employment statistics to find a place where you can maximise any profit in 6-12 months.
- Property Condition: If you’re new to the process, you’ll need to ease yourself in, so start with a property that doesn’t need too much work. Remember, the more work you can do yourself, the cheaper the property will be and the greater the profit you will end up with. If you fancy a big project, then consider going on a course first to reduce your cost.
- Analyze the Kitchen and Bathroom Closely: These are generally the areas that will need the most work and generate the largest amount of profit for you, so make sure you take a careful look. As was mentioned above, they’re also the place where you’re likely to need specialist help with issues.
Limiting Your Risks
So, we know that people can make serious amounts of money from flipping properties, but we also know that the risks are large too, so how do we negate them? Well, by following the above steps, you can limit your exposure to risk, but you’ll still be hoping the market doesn’t shift against you. Luckily, even if it does, there are other options and you can even sell quickly to somewhere like House Buyer Bureau if you need an immediate sale. So, if you’re looking to flip, view the market carefully and consider all your options closely. There’s money to be made, but it can also be risky.