Flipping houses is one of the top active real estate investment strategies. If you’ve recently purchased an investment property or are looking to do so in the near future, you might be looking to flip your investment.
Make sure you don’t lose money on a risky investment by avoiding these 5 common dangers when flipping properties:
Flipping Houses Danger: Not Calculating All Expenses
Financing your investment property can be expensive. If you’re financing the purchase of the property, you’ll need to make sure you’re able to finance the entire venture. That includes paying for renovations (the renovation crew, materials, and unforeseen expenses). You’ll also need to include any property taxes you may be responsible for.
Be sure to calculate all expenses before taking out a loan on your investment property.
Danger: Running Out of Time
There can be time limits involved in flipping houses. Maybe you’re planning for renovations to be complete by the peak selling time in your local market. Or maybe you took out a short-term loan that is due by a certain month.
Whatever the reason, renovations take a considerable amount of time and a number of construction projects often run long due to unforeseen issues.
Make sure you build extra time into your plan when calculating your timeline.
Flipping Houses Danger: Forgetting about Insurance and Mortgage Expenses
If you’re financing your investment property, you’ll need to pay homeowner’s insurance and the home’s mortgage while renovations are being performed. And, since you’re not using this property as your primary residence, these costs are often above market value.
Be sure you have enough money to cover these expenses for more than the allotted timeline of your project — just in case it runs long.
Danger: Low-balling Renovation Costs
Renovating a home is expensive. If you bought a fixer-upper or even if you’re looking to improve a home in a top neighborhood, your expenses will be high. It’s important to talk to renovation crews ahead of time to calculate how much money you’ll need to spend on top of financing your investment.
You want to make sure renovating the home is a worthwhile expense, so you don’t end up losing money or breaking even.
Flipping Houses Danger: Over-Estimating the Market
We’ve all heard about success stories from flipping houses, but it’s important to be realistic when setting your goals. You have to do market research and understand the health of your local market and whether or not it’s expected to grow or decline.
Plan your investment property for peak season, when there are more buyers or renters willing to pay top dollar, to maximize your ROI.
See you at a meeting soon!
The Southwest Florida Real Estate Investment Association is the leading source of SWFL real estate investing events that provide investment education and networking in southwest Florida. We analyze the housing market and foreclosures and provide information, education and networking events in order to build a network and knowledge base for investors and potential investors. Our members include real estate agents, brokers, investors, hedge fund managers, rehabbers, wholesalers and more.
Our SWFL REIA General Meeting is held in Fort Myers where we provide education on hot topics in investing and an opportunity to enjoy the camaraderie of your fellow investors. You’ll get a chance to ask for advice from successful real estate professionals and even make a few deals on your latest projects.
To become a member, anyone can register as an individual, a couple, or a corporation. Being a member opens the doors for endless networking opportunities, advice from members with decades of experience, new ideas from entrepreneurs, camaraderie with those just beginning, and deals and contracts done in the meeting room. For those interested in Cape Coral rental property investment and/or Fort Myers rental property investment, SWFL REIA will be able to provide a network to help launch a successful investment career.
The SWFL REIA is known and respected as a source of current, actionable and useful information about the housing market in the area that we meet.
We meet twice a month.
One of the premier sources for real estate investing networking and education is the SWFL REIA. In the real estate world, the SWFL REIA is different in that it does not do information product sales. Their meetings are focusing on the best ways of investing in real estate by collaborating with other property investors who are sharing their experiences.
We look forward to meeting you at a meeting soon!
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