Ready to get rich quick? We’ve all seen the shows on HGTV. A couple buys a flip home, (sometimes without even looking inside), knocks out a wall, remodels the kitchen and it sells quickly. By the end of the show, they’ve pocketed a nice chunk of change and are off to the next flip.
Sounds awesome right? According to RealtyTrac, home flippers averaged approximately $66,000 profit per home in 2017 and $62,000 in 2016. Who wouldn’t want to make that kind of “easy” money.
Well, hang on, it may not be so easy.
It may just be a sign of the times but everyone seems to be dabbling in real estate. Think you have what it takes to be a “flipper” in today’s market?
In Florida, in cities such as Miami and Tampa, investors can readily find foreclosures with potential for big profits. Locally however, our market doesn’t have as many properties with the same potential. Flip properties tend to be born from foreclosures and short sales, and our availability is extremely low. While great news for the local economy, it’s not advantageous for a quick flip scenario.
If you think you have what it takes to become a flipper, there are a few things you should consider first.
- How will you pay for the initial purchase? This is an important consideration because the condition of the property may make them ineligible for financing, so having some cash is important.
- How will you pay for the repairs? Sure, you can put the supplies on a credit card, but there will most likely be labor costs to be paid. Will you be doing the repairs yourself or hiring a contractor? Keep in mind updating will most likely require permitting and repairs that must be completed by licensed professionals.
- Finally, do the math first! Calculating the cost of the home and repairs to determine if the future payoff is even worth your time and money. Know the market, know trends that are important to buyers in your price point. Get advice from the pros, learn what work requires county or city permitting and if a homeowner can do the work if it is going to be resold within a certain time frame.
Would it surprise you to know many real estate agents also flip properties? We have the advantage of checking the latest listings minute by minute and have the knowledge necessary to know what the potential could be based on recent sales and neighborhood trends. However, even with all our expertise and tools, flipping can be a gamble.
Rolling the dice in real estate isn’t for the weak at heart, but a jackpot just might be in the cards! Good luck!