What You Should Know About Flipping Houses

At first glance, flipping houses is the process of buying a house with the objective of making a profit when you sell it. However, things can become complicated and it involves making many decisions along the way. If things go smoothly, you'll reach your goal, but because of certain negative factors such as poor budgeting, errors in timing, an increase in crime in a flourishing neighborhood, you may find that the house is hard to sell.

To a great extent, house flipping is affected by the current real estate market, which is definitely cyclical. In a boom period, you will have an advantage and realize a substantial profit, but during a slump it may take several months to sell that home.

Here are some options for you to consider:

â- After picking the right location, you need to decide what kind of home you plan to purchase. For example, if you decide on a "fixer upper," be prepared to invest both time and money in improving it. In this case, most real estate experts recommend adding 20 percent to the estimated final cost so that, even in the worst of circumstances, you won't have to sell at a loss. Note also that structural improvements, such as wiring, plumbing, HVAC and insulation, are the most essential improvements you can make,

â- If you purchase a foreclosed property, it may be significantly undervalued, which will have a positive effect on its profitability when you find a buyer. However, the previous owner may have neglected its upkeep, and that is something you will have to contend with.

â- Currently, the trend is to flip houses in newer, high-end suburban developments. In this case, if retail and commercial developments follow, it could attract a significant number of potential home buyers. But if something unexpected happens, such as a spike in gas prices, and consumers want to avoid long commutes, there will be a definite element of risk involved. Even when you purchase a newly constructed home, if the housing market softens, you may not be able to flip that properly as quickly as you had hoped.

â- To realize the greatest profit when you flip a house, real estate agents typically recommend upgrading the bathrooms and kitchen. Of course, there will be additional expense involved if you need to hire contractors to complete the work.

In every situation, the home's "curb appeal" is another important issue to consider. Wit this in mind, you might need to do some landscaping, paint the exterior and repair the driveway, all of which will add to the cost, along with any homeowners' association fees and security charges.

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MB McLane has been flipping houses for more than 5 years. She also dares to enter the lion's (writer's) den every now and then at http://homeflipping.net

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