Have you thought about buying a home, fixing it up, then selling it for a higher price? It's called house flipping, and it's a growing trend. Some 207,000 single family homes and condos were flipped last year, and increase of 3000 over 2016 and the most since 2006.
It may seem easier to flip a home than you think. Of course, TV shows make it seem easy. And marketers don't always want you to know that it can be a bit difficult to flip a home. But flipping a home is certainly not impossible, and certainly worth the effort if you protect yourself.
Here's a few ways you can avoid the pitfalls:
Be careful where you take advice.
Home values have been on the rise since 2008, and since then it's been easy to make a profit. It's not as easy when prices are falling. Try to get advice from home flippers who have been through several market cycles and know how to handle the changes.
Keep an eye on the market.
Be cautious if you see increased inventory, longer days on the market, or falling home prices. If any of these occur, it could take more time to sell and you may not sell for as high a price as you anticipated.
Avoid short term loans.
Flippers are attracted to short-term loans, but they can actually be more costly as interest rates rise. This will obviously eat into your profits.
Don't cut corners.
Make sure you get the right permits. You could be held liable for damages or have to redo work that was done without the proper permits. This is especially the case with electrical work.
Make the Time.
Your time is an important commodity to take into account when flipping a home. If you have a full-time job on top of it, you have to make sure you have the time and energy to devote to the renovation. If you don't have the time, make sure you find someone to partner with who has the time and experience. After taking an honest look at your time, you may discover that flipping a home is not the right move for you.
Flipping a home can be a rewarding adventure and a great way to make money if you do it right.
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