Are you ready to explore different ventures of investing your money as a newbie real estate investor? Flipping properties is among the top choices, but before you go to this real estate investing route, I suggest you take a look on the advantages and disadvantages of flipping, then, find the real score if it’s a perfect match for you.
Advantages of Flipping Properties
- Make quick profit
One of the greatest advantages of flipping properties is the chance to make quick profit provided you have done your best to transform a distressed property into an appealing place to live.
- Gain more experience
Another advantage that a newbie real estate investor could get from flipping properties is gaining more experience in areas:
- From simple repairs, to major home improvements and renovations, flipping properties will surely widen you knowledge in these areas even if you don’t have any background in construction. As you make yourself involved all throughout the fixes of a distressed property, you become more aware on how the experts do things the right way. For example, you can see how your contracted builder will make a detailed layout on how to start the rehabbing from scratch including budgeting the materials and labor.
In real estate industry, it is crucial that you have a clear idea of your targeted market before you invest your hard earned money. So, as a rule of thumb it’s for your own good if you do a survey of the market. Ask yourself, “Are there many potential buyers hunting for affordable rehabbed properties?” Or, you might discover that most of the interested buyers in a particular community would favor a property where their ideas will be considered such as building from scratch a dream home.
- Widen your network
Flipping properties can help you widen your network as a newbie real estate investor. Imagine you get a chance to connect with builders, contractors, marketing firms and even lenders as you head on with your flipping projects. Make sure you retain good relationship with these people because there is a huge percentage of needing them in the near future for your next real estate investing, regardless you decide to choose another venture aside from flipping properties.
Disadvantages of Flipping Properties
Every real estate business venture has its own risk. Flipping may pose some disadvantages, especially if you are just new in the real estate business. Below are some of the drawbacks when flipping properties:
- Unaccounted expenses
Among the disadvantages of flipping properties is the unaccounted expenses that you cannot predict that will happen such as increased in materials used, delays in the completion of the project as well as other costs that you may not be prepared to shoulder. Sometimes, higher taxes that real estate investors will need to pay is the reason why they will decide to chose another real estate investing channel like rental properties.
- Loss of profit
This is another risk that some newbie investors are afraid to face when flipping properties, loss of profit. How can this happen? If the property you rehabbed has been there for months with no offer, you might be compelled to accept a cheaper offer even if it means not earning much because any additional day, weeks, or months is already loss of profit.
Yes, we can’t prevent being stressed when not a single prospective buyer has made a decent offer to your property on sale. Flipping properties can take most of your time, energy and money, then, keep your stress levels at its peak which could not be healthy.
Are you ready to take the plunge and give real estate investing like flipping properties a fair chance? If you have set your mind to start flipping properties, make the most of your time, energy and money and never get discouraged if there are failures along the way. Use the above ideas to ensure you make a wise decision when investing.