12 / 08 / 2020
House flipping - is it a good idea for investing profitably?
Low-interest rates on standard investment products have led to high interest in the real estate market. Investors use different strategies to generate profit, including so-called house flipping which nowadays provides many opportunities for making money. What is house flipping? What are the prospects for profit from the fast-trading of real estate? In this article, you will find answers to these questions and much more.
How does the house flipping work?
The term "house flipping" refers to the method of generating income from purchasing and quickly buying real estate. The investor buys a neglected apartment or house, which have a potential, good localization and can be thoroughly renovated or refreshed in a short time, does the necessary work, decorates it and then sells it with a profit. However, to maximize the income, the furnishing of the apartment comes down to equipping individual rooms only with the necessary appliances and applying the principles of home staging for their presentation.
The investor's profit depends mainly on whether they find an attractive real estate. What does attractive mean in this context? It refers to a flat or a house that ideally should be located in an appropriate area (depending on whether it is residential or commercial it means something different). The real estate for flipping does not have to have an impressive appearance, but its foundations and elementary aspects such as walls, installations and floors must be in a condition that does not require a thorough renovation, as this is the most expensive and labour-consuming part of a makeover. Moreover, it should be at a sufficiently low price. Not every apartment or house is suitable for house flipping. The rule is simple - to earn a person needs a neglected apartment or house to renovate or refresh, which has sales potential. People who gain from the real estate must be systematic and patient and have a lot of both financial resources and time.
How much can you earn on house flipping?
Can you make good money with house flipping? If you look at the financial results of people who do it professionally, they achieve an annual rate of return of up to 150%. However, to be able to demonstrate an impressive profitability of such investments, you need experience and knowledge. Each investment is different, and the investor must be prepared for unexpected expenses, which will appear even during the renovation. The basis is, of course, the calculation of costs and potential earnings, as well as a lot of patience.