Weekly Investment Feature: House Flipping
House flipping is another type of real estate investment. Flipping requires some knowledge about the real estate market in order to get significant returns, but can be a great way to invest with available upfront capital. House flipping does require capital upfront to buy undervalued properties, but oftentimes they work on a short timeframe to relist and sell the property which can yield profits without need for a significant number of mortgage payments. There are two different kinds of flippers, ones who look for properties they can profit on without renovation, and ones who add value to their properties through renovations. Each method has its own pros and cons. While there might be less on the market for a property flipper who doesn’t invest money in renovation, their turnover is faster meaning they can take on several properties at once depending on capital. A flipper that renovates can take on significantly less properties as they need time and money to invest in renovation, but their profit might be higher.
Both kinds of flipping have benefits including:
Shorter time frame necessary meaning capital is not tied up for long.
If done right, gains can be significant.
Option to not invest in any repairs, saving time and money.
Some drawbacks are also present however such as:
Real estate market knowledge required to successfully flip.
Cool market periods causing money to stay tied up unexpectedly.
Investing in real estate through house flipping can be difficult for a new investor, but the right person can find it to be a great method for return.
