A growing number of Texas investors are looking to add real estate to their portfolios, often through the prospect of “flipping” properties. Flipping essentially involves purchasing a lower-cost property and making improvements that increase the value of the property, thereby selling it at a profit. Here are three considerations people should look into before taking the plunge into flipping a property.
Time commitment
Flipping a home requires a fairly significant time commitment, even for owners who plan to outsource much of the work. People should also be prepared for a significant amount of time to pass between purchasing the home, completing renovations and selling the home once again, as there can be many steps along the way. Being realistic about the timeline and work involved is important for those looking to have success in this arena.
Financial considerations
Purchasing a home may be the main investment in flipping property, but it is far from the only thing to budget for. Generally, the cost to flip a house is around 10% of the total purchase price. However, very low-cost properties with a lot of work to be done can end up being more, so having a buffer is a good idea.
Know-how
Flipping houses can seem like a great investment from a “dollars and cents” perspective. But the success of this venture can depend a great deal on how much the person or people involved in the project know about fixing up houses. Learning a trade or two, or partnering with someone who has skills in this area, can make a big difference in the overall outcome.
Many people interested in getting into house flipping can be very eager to get started. This is especially true if they see a property that they think is a particularly good deal, or that feels like it may disappear shortly. Pre-planning with regard to time, finances and the plan for renovations can help people to set clear limits and have awareness about what will and will not work for them before taking the plunge. Consulting with an experienced Texas real estate lawyer is also a good idea before jumping into making an offer of any kind.
