3 Major Problems You Can Face When Flipping Houses
Flipping houses has quickly become a point of interest for many investors. Even those who have very little investment experience find themselves intrigued by the idea of acquiring a run-down property for very little and putting their own hard work into it in order to obtain a high return on that investment.
Although there are certain popular television shows that make the process seem fun and creative, there is so much that goes into flipping a house that you should be aware of before you actually take on such a project yourself. While it can be a great way to turn a profit under the right circumstances, a great deal has to come together in order to make this a viable option.
Those who are new to flipping houses often face particular problems while they are learning the process. Here are three such problems that can arise when you are flipping houses for a profit.
photo/ tkoch
1. Running Out of Time
Many people don’t realize that once you purchase a property to flip, the clock starts running. The longer you sit on a house, the slimmer your profit becomes. Furthermore, you might be working on a certain timeline issued by your lender if you have taken out a loan in order to acquire a property to flip.
Because you never really know what you are getting into with a property, it is all too easy to run into some roadblocks in the renovation process. Before you know it, you are running out of money and unable to make the payments on your loan or mortgage.
While there are options for getting out of such trouble, like distressed foreclosure loans, you should do your best to understand precisely what it is going are getting into when you take on a certain property to flip.
2. Not Enough Practical Skill
Flipping a house for profit is about so much more than installing new countertops and applying a fresh coat of paint. Rather, those who wish to take on a flip should be prepared to put some serious work into a property in order to see the highest return.
Furthermore, since house flips generally involve older homes, you should be aware of the chance that new plumbing and electrical will need to be installed. Walls might need to be moved or removed altogether in order to modernize the layout, and landscaping might also need to be addressed. Those who aren’t skilled in such areas will only spend their money on contractors and other professionals, thus decreasing their profit margins.
3. A Fickle Market
The other factor that can often take house flippers by surprise is the housing market itself. You are very likely going to be spending a few months, if not longer, on a flip. It is important to do your research and gain the best understanding possible about the market you are flipping in. You don’t want to put all of that work and money into a property only to have the market take a turn for the worst when it is time to sell.
Author: Carol Trehearn
