Flipping homes is not just about finding the cheap fixer and doing a quick fix. There are perils that can seriously jeopardize your ability to make a profit on the flip. Big-ticket items like heating, cooling, wiring; plumbing and structural issues can come into play. Financial concerns such as overpaying, and construction costs can become a major issue as well. Finally, there is stress and physical labour involved.
In order to make money you need to realize that you must minimize your overhead. In order to do this you must first research the area in which you are making you purchase. Check the sales history; what is the median price range? What is the most expensive sale in the last six months? This will allow you set a budget for the purchase and construction costs of your project. A little research at this point will go a long way towards making your venture profitable.
You also save money by doing as much work as humanly possible yourself. Contractors and other trades people are in business to make money. They are not in the business of making you money. So if you do require trades people to assist in the project then keep in mind that you will need to closely watch what their services cost you.
If you don’t know about the wiring, plumbing, or structure, then get an inspection. In fact if you feel plumbing, wiring and structure are over your head, then reconsider flipping houses altogether. Knob-and-tube or aluminium wiring was used frequently in older homes and can create an electrical nightmare. Galvanized plumbing can create issues in the plumbing department. A bad foundation, rotted roof along with a host of other structural issues can quickly evaporate any potential profit if they are not caught before the sale is completed.
The reality is that anyone can flip a house, because all it takes is time and money. Making a profit flipping a home is much more difficult prospect. History has shown that people believe they can make an easy buck because others make it look easy. They reality is that the business of flipping houses is stressful, expensive and hard work.
