Flipping offers investors a lot of money-making opportunities. Read about some your options here.
Flipping is one of the fastest ways that you can make money investing in real estate. When you flip a property, it means that you buy and resell quickly, instead of holding on to it and hoping for a bigger profit later.
House flipping comes in different forms, all of which come with advantages and disadvantages. If you plan on becoming a house flipper, here are some of your options for earning back your investment.
1. Buy a fixer-upper, get it in shape and then resell it. The fix and flip is probably the most popular option because it’s a tried-and-tested method that works. Depending on where the property is located and how well you were able to fix the property, you stand to make a lot of money out of it. Just be careful that you don’t overpay for a broken-down home with more repairs that you can afford to do.
2. Buy a fixer-upper, get a refinancing and lease it out. Similar to the first option you buy and fix a property, but instead of selling it, you refinance it and offer it as a lease-to-buy. You can easily get back the mortgage you borrowed with the rent that a tenant pays you, and then stand to gain even more should the tenant decide to purchase the home.
3. Buy a fixer-upper and sell it as is. If you don’t want to fix up the place or pay someone else to do the work, you can sell it the way it is for below market value. You may not be able to earn as much as you would if you fix it up, but if the property is cheap enough and the neighborhood is right, you can still get something even if you sell it below market.
4. Buy a pre-construction and resell it. This strategy involves buying a property at its pre-construction stage and then selling it once it’s finished. If completion of the property takes as long as one year, you can earn money selling it for more than you paid for it if its value increases during that time. Of course, it can go the other way and lose value, leaving you with a property that you can’t sell for more, so make sure that the property is in a prime spot and that it’s backed by a reputable developer.
Flipping may seem easy, but it takes quite a lot of work and research to make sure that you earn money instead of losing it. Also, house flipping is not something that you should do on a full-time basis; if you’re not that experienced in it or if you know that the real estate market is not that stable, don’t quit your day job.
Jillian Cariola, Writer
(cover image by Stephen J. Sullivan)