Reccession, Should I Fix & Flip?

During the real estate boom, many investors did a lot of "Flipping*" properties. Everywhere you turned you heard about Flipping a House. From television to friends, everyone was talking about (or doing) this. Now in the current economy, house flipping has slowed down quite a bit. And it is easy to understand why. It is a buyer's market, which means prices are lower, as in every market, a home is only worth what a buyer is willing to pay. But even in the current economy flipping houses is possible. Here's how:

-Do an analysis of the home, how much will it cost to fix it? What needs to be done? Are there going to be any surprise costs?

-Do a market analysis (I recommend contacting a local Realtor for this), how much are the homes that are in good (fixed) condition of similar size, style, & location selling for?

-Be sure that the price of home, repairs, & potential unexpected costs are less than what the market price should be. (They should be less than that amount by how much $ you hope to make and allow a bit of a buffer, for those unexpected expenses)

If you do all these things it will help you decided whether a home is worth flipping, but be aware, that during the time that it takes to fix the property, the market will be changing. The real estate market is a constantly changing thing, this is why the buffers, etc, are so important. You may want to be sure that you can afford to sit on the property and possibly rent it out, until the market goes up. Just be sure to think over all options, and very carefully weigh the benefits versus the disadvantages of flipping in your housing market.

If you decide you want to start looking for an investment property to flip contact me here for help searching for the ideal investment property.


*Flipping property: purchasing a home below market price (that usually needs work) fixing it up and selling it for profit.

Tips for Buying Investment Property

During this current market, with the low prices, foreclosures, and short sales many people are starting to mull over the idea of investing in property, especially rental properties. There are definitely some things you will want to consider before starting your search, as you do not want to rush to find an investment property and have it turn out to be the wrong one for you.

1. Talk to an accountant and analyze your finances, start working on your credit score etc. You will want to have everything lined up so that you can ensure that you will be making money with your investment.
2. Be sure that you will be able to save your money towards other life goals (such as retirement, vacations, education, etc) even with making this investment.
3. Talk to a mortgage broker and get prequalified so that you know how much you will be able to borrow, and can start looking within that price range.
4. Do not overestimate how valuable the rental will be. You will need to figure in potential repairs and vacancy time.
5. Research your real estate market trends, you could possibly have a Realtor help with you this, so that you can have an idea of what the market has been doing and what its potential is in the future.
6. Decide how long you want to own the property as that will affect how much money you may potentially put into the property. The longer you own it, the more repairs that will need to be done over the years, to keep up with basic maintenance.
7. If you are a small investor, long term ownership does make the most sense, as you will not have to worry quite as much about market fluctuations, the longer you own a property, typically the more equity you will build in it over the years.
   
8. Do not get emotionally invested in a property. As this can make negotiations harder to do.
9. Have the property fully inspected, even if you are looking for a fixer-upper, as this can help you to know if there are going to be any unexpected expenses regarding things that will need to be fixed.
10. When comparing the rent on similar properties in the area you will need to be sure that you price your rent in a similar range (to ensure that it rents as well as the others do), while also being sure that the rental income will cover out of pocket costs.
11. If you are looking at properties in housing developments, you should check and HOA's or covenants to be sure that renters are allowed in those neighborhoods before you make an offer on that property.
12. Once you have your property you will need to decide if you want to manage it yourself or go through a rental company.

These are just a few things that you will need to consider before you purchase that first investment property, as you go along, there will be other things that you will need to consider. Each person will need to make this decision on their own, as every person and situation is different. So decide which route is best for yourself.