Flipping houses is a type of investment strategy. It entails purchasing properties at a low cost. The property, called a “flipper,” is turned into a product of much higher value, often by way of renovating the home. The “flipper” is eventually sold at a much higher cost.
In a recession, real estate can be purchased with steep discounts. It is usually when investors snap up properties to flip. Foreclosures -- a number of which are a product of recession -- are a popular pick for investors looking to flip homes.
The location and condition of the home can make or break the flip. Location, of course, is key in any real estate sale -- the home has to be in an up-and-coming neighborhood to have any resale value. Its condition, meanwhile, will determine the cost of renovations. Dilapidated homes may be cheap on paper, but repairing them runs the risk of going beyond the budget.
The size of the home should also be taken into account. Smaller floor area means lesser upfront costs, and this makes the space perfect for new investors. Smaller homes also mean there’s less to renovate. Greater floor area means higher costs, but it has higher potential returns from the flip.
Flipping the home
Get the basics taken care of – fix the plumbing, check the electrical connections, update air conditioning units, and install utility conduits. Then get to the decorating. Give the wall a fresh coat of paint. Lighter colors are generally more inviting and easier to complement with decor. Sanitize the entire place. If the property has a lawn, you may work on that too. As final touch, spray some inviting scent for would-be buyers.
Flipping homes is a lucrative avenue for the initiated. All it takes is strategy and some work. Some investors prefer a short-term flip -- this entails holding on to the property for only a few months before putting it back up for sale. Others yet opt to wait for a bullish market to come into play.