Beginner Real Estate Investors - To Flip or Not To Flip

James Orr

Visitors: 335

So, you have decided to start investing in real estate and you are wondering whether to flip properties. Maybe you've attended a real estate investment seminar and pre-seminar on flipping properties. Maybe you've seen a television program about how easy it is for people to make $30,000 or more flipping properties. Maybe you saw an article in your newspaper about the flipping property craze.

Well, step back and think it through before you go out and put your first house under contract.

First, flipping properties can be very profitable. You really can make up to $30,000 or more buying a property, doing some rehab and then reselling it for a huge profit.

Is it easy money? No.

Flipping houses is work. It takes hard work to find an exceptionally good deal. It takes knowledge of your market. It takes knowledge of rehabbing. It takes knowledge of the house selling process. It requires holding money and it usually takes longer than you thought it would. That 3 month time frame you had in mind will probably be more like 6 months unless you've done a lot of fix and flips before.

You know the upside of flipping properties: relatively quick cash, but consider also the downsides.

What if during the 3 to 6 months you are working on the house you see a significant change in your market? What if prices down 5, 10 or 15% during that time frame? You need to be prepared for that.

What if you significantly under estimate repairs? What if a $10,000 projected repair budget turns into a $35,000 budget instead? If you had decided to do a deal with a solid $25,000 in profit, but your budget for repairs is suddenly $25,000 higher, then you are working for free.

Also, once you sell a house, you stop making money on the house. With rental property, your tenant pays most, if not all, of the expenses on the property while you continue to profit from income on the house from rents especially as they go up over time, tax incentives from depreciation on the house, equity build-up as the loan is paid down and appreciation from the rise in values over time.

In summary, while flipping properties can be a good way to generate large chunks of cash, it is not easy money. Furthermore, it should be considered speculation and not real estate investing. Long term real estate investing in rental property gives you long term benefits from the property.

James Orr is a professional real estate investor and marketing expert.

You can subscribe to his real estate e-newsletter and access audio downloads, articles, marketing materials and educational real estate videos at his Real Estate Investing blog.


Article Source:

Rate this Article: 
Real Estate Bird Dog Tips to Find Real Estate Investors
Rated 4 / 5
based on 5 votes

Related Articles:

Fix and Flip Does it Still Work For Real Estate Investors?

by: Alexandria Anderson (June 21, 2008) 

The Art Of Flip Real Estate

by: Chet Holcomb (November 03, 2006) 
(Real Estate)

Flip That House Style Real Estate Investing

by: David Neese (January 06, 2006) 
(Real Estate)

Why Pre-Foreclosures Make a Great Real Estate Flip

by: Tracy L. Caywood (September 10, 2008) 
(Real Estate/Foreclosures)

Columbus Ohio Real Estate Agent Says - Flip That House!

by: Konrad Braun (February 07, 2008) 

The Flip Side by Flip Flippen Book Review

by: Nancy Eaton (June 06, 2007) 
(Shopping and Product Reviews)

7 Reasons Why Real Estate Options Are Ideal for Beginner and Advanced Investors

by: Alex Nghiem (October 01, 2005) 
(Real Estate)

Motorola Flip Phones - My Experience Shopping For Motorola Flip Phones Left Me ..

by: John Briggs (August 29, 2007) 
(Communications/Mobile Cell Phone)

Convert Flip Video MP4 to Sony Vegas WMV, Edit Flip HD video in Sony Vegas

by: Ti Mili (July 08, 2010) 
(Computers and Technology/Software)

Real Estate Bird Dog Tips to Find Real Estate Investors

by: Gary Goh (July 08, 2008)