House Flipping – A Potential Flop?

“House flipping” is an increasing buzz word in the real estate industry and its growth in popularity has only been helped by reality TV shows inspired by the process like “Flip This House,” “Flip Men,” “Flipping Out,” and “Extreme Makeover: Home Edition.” In its simplest form, house flipping is buying an out-of-date, run down, or even foreclosed house, fixing it up, and selling it for a profit. Sound easy? Well, it’s not.

These TV shows have created a lot of buzz and piqued a lot of people’s interest. They make house flipping seem easy and very profitable by fitting a whole renovation and selling process into an hour. However, this is not the case in reality. The process of flipping a house, when done correctly, could take months. With the odds against the average person, here are some things to think about when considering an attempt at house flipping:

House flipping, like any other type of investment, requires a good amount of principle to start. The price of flipping a house adds up quickly. You’ll have your initial purchase price, monthly mortgage payment, and of course the renovation costs. Keep in mind that professionals are always more expensive than the DIY method but are a necessary expense if you don’t have the knowledge for a specific project. Lastly, there are costs to hold the property while it’s on the market (such as utility bills), and don’t forget about taxes and interest payments if they apply to your situation! All these costs chip away at your profit.

Flipping is almost always a long term investment, it requires a lot of time and you need to do your research. It could take months for you to decide on a property to purchase. Your decision to be based on a number of different factors like location, state of the property, and even the schools in the area, depending on who your likely buyer will be. It takes time to inspect and renovate your property as well. The most important areas are the kitchen and bathrooms. These rooms build the most value to your property and are the first to be considered for remodeling. It may also take some time to find appropriate buyers.  Through the whole process you have to be patient and think it through. House flipping can be a risky investment, so it’s better to go about it after doing your research than just jumping into it after seeing it on TV.

MRI’s property management software can help you in this process. Whether you’re trying budget funds to attempt a flip, flipping to add to your portfolio, or renting out flipped property MRI’s property management software can be used at any step in the process.

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