There are tons of shows about it and even more people with supposed success stories doing it. Flipping real estate properties is one of those more modern real estate investment ideas that has everyone down to the average Joe believing they could buy a property for a little and then sell it for a lot. While these opportunities definitely exist, flipping houses is often far more complicated than what someone with no real estate experience can see in the beginning. If you are considering investing in real estate for the first time for flipping purposes, there are a few key features that you must be on the lookout for as a buyer.
Make sure the property is in a desirable location.
You find a home listing that doesn't appear to have anything more than a need for a little sprucing up and it is for the right price. Even though a house may look like it is cheaper than most, there is most often a reason, and that reason could very well be that the location it is in is not a desirable one in the eyes of most buyers. Before you jump on what seems like a bargain, check out comparable listings in the same area to see what they are going for. Do your research to determine things like:
- crime rates in the area
- proximity to schools and business
- whether there are environmental concerns nearby
Make sure the home is not filled with hidden expensive problems.
It is easy to see a home with a few issues and guess that it will not take a whole lot to fix it up, resale it, and turn a profit. Perhaps the biggest mistakes first-time flippers make is underestimating how much repairs and upgrades will cost. Prepare a list of what you need done and obtain several estimates for the work. Have the house checked out by a qualified contractor to track down hidden issues. Use this information to decide whether or not you can logically take on the project and make a profit.
Make sure the home is in line with current market trends in the area.
Every area has its own demographics as far as family sizes, income levels, and household needs. Use this information to invest in property accordingly and you will be much more likely to see the home sell quickly. If you spot a small one-bedroom house really cheap and decide to invest and turn it into a project, you don't want to see the finished product on the market indefinitely because there simply are not enough buyers in the area looking for a house of that size.