Thursday, July 2, 2015

Flipping Homes

August 9th, 2013

I love watching shows about flipping houses. People that go in and buy distressed properties, then fix them up and sell them. Problem is that I’ve never seen a show turn out bad for the homeowner and that isn’t always the case. TV can make the process seem easy and quick while they don’t mention some of the issues that come along with it.
1. Holding the property: Some homes just don’t sell right away once they are fixed up and beautiful. In reality, you will be making a payment on that house until it sells and that has to be taken into account. It is important to really study and know the real estate market in your area. If you know how long it will take to sell the home, on average, then just budget amount into your calculations.
2. Unplanned Expenses: Not every home that you are wanting to flip will give you the ability to know of every problem upfront. Meaning some people buy homes sight unseen in hopes that the ‘good location’ will make up for it. Sure, that can be the case sometimes but you are going to have to go into this with a budget and the reality that you will have some expenses that are now 100% your responsibility. These may include termites, water damage, electrical problems, plumbing problems or structural issues. Once you purchase the home you have to take the attitude that you will see the project through or you will just waste even more money on the process.
I owned several properties in Arizona when I was first getting started in real estate. One of the first homes I bought had a swimming pool and I thought that was so great. I didn’t know anything about pools or maintaining pools. Once I bought the home I found out the pool had a major issue with holding the water. Somewhere and somehow the integrity of the pool was compromised and couldn’t really hold water. I learned a valuable(and expensive) lesson that day in that when you are flipping homes you need to really understand what the average homeowner wants and can have, not what you want. The pool ended up costing us thousands of dollars and made that property a loss when we finally sold it.

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