Are you wondering whether or not you should fix and flip houses in 2023? This is why flipping houses is a wise investment choice.
The US real estate market is a thriving marketplace worth a staggering $202.6 billion.
These days, almost everyone wants to get their foot in the real estate game because it’s a goldmine. Unfortunately, most give up along the way because of the sheer amount of investment capital needed to venture into real estate.
However, you don’t need fat pockets to venture into real estate. Activities like flipping houses let you get into real estate without stretching your budget. But, what exactly is house flipping, and is it a sound investment in 2023?
Keep reading for these answers and a lot more. That’s because today, we’ll be looking at what house flipping is and whether it’s a lucrative venture.
What Does Flipping Houses Entail?
Flipping houses, or house-flipping, is when someone buys property with the aim of selling it for a profit after a short time. It’s a form of real estate investment where the house buyer buys a house at a low price. The buyer then fixes and remodels the house with the aim of selling it later on at a much higher price.
Within the short period of ownership, investors must work to ensure they perform repairs and upgrades to the house. The investor only sells the house if it fetches a higher value than the house purchase price, plus the cost of the remodels and repairs.
Most house flippers earn their profit usually within a year, and sometimes even in two months. All this depends on the kind of remodeling and renovation the house needs.
What Are the Benefits of Flipping Houses?
House-flipping seems pretty simple on the surface. You buy a house, fix it up, and sell it for a profit. While all that is clear, is house-flipping really as lucrative as it sounds?
To help answer that, here are a few benefits of house-flipping.
The most significant benefit of flipping houses is that it’s super profitable. The average house flipper makes around $30,000 for every house they flip. Of course, this figure varies depending on the type of house you’re flipping and how much it costs to fix up the house.
Let’s say you flip 3 houses in a year; that’s a whopping $90,000 worth of income annually. If you establish a house-flipping firm, you can rake in hundreds of thousands of dollars every year.
It’s an Excellent Side Hustle
Not many people have the luxury of devoting their entire lives to real estate or house-flipping specifically. Thankfully, house-flipping doesn’t require too much of your time or attention. That means you can work on flipping houses part-time, while you focus on your actual career.
However, this doesn’t mean that house-flipping is a cakewalk. No, far from that, house flipping involves a lot of planning, work, and a ton of commitment. However, it won’t be enough to derail you from your current career.
Scaling up your house-flipping venture requires your undivided attention. In such cases, you might want to quit your career and focus on house-flipping. However, you might want to dip your toe in the water first, before going all in.
You can Be Your Own Boss
Are you on the brink of quitting your 9 to 5 because of work frustration or an unreasonable boss? If you are, it’s time to consider flipping houses as your main income stream. That’s because, with house-flipping, you don’t have to work for anyone, except yourself.
That’s right, house-flipping gives you a rare chance to escape the 9 to 5 grind. You no longer have to worry about being late for work or your boss ripping you to pieces. House flipping allows you to make money at your convenience.
It’s Easy on Your Pockets
As mentioned earlier, house-flipping is one of those real estate ventures that doesn’t require emptying your life savings. Unlike other real estate investment options, flipping houses doesn’t require a lot of start-up capital. You can’t compare flipping houses to building your own rental property in terms of start-up costs.
With house-flipping, all you need is enough money to buy a run-down house and make the necessary repairs and renovations. Plus, there’s a high chance you’ll get a lot more than what you spent on flipping the house in question.
Of course, there’s always the possibility that you can’t afford to buy a run-down house or fix it up. In that case, you can consider fix and flip financing, that’s available for every house flipper. Fix and flip loans allow house flippers to finance their activities, and here’s how they work.
The lender gives house flippers a short-term loan to finance their house-flipping. The house flippers can use the money to buy the property and carry out the necessary renovations. They can also use the money to build new property in an area with dilapidated residential units.
It’s worth noting that these fix and flip loans are limited to only residential premises. You can’t get a fix and flip loan to renovate a business complex. If that’s the case, you’ll have to look for alternative funding like from a Ground Up Construction lender
If your house-flipping project sails through, you’ll receive a lump-sum payout in as little as three months. This is unlike other business ventures where you’ll have to wait over a decade to get your money back. If you play your cards right, you’ll be laughing all the way to the bank in a matter of months.
No Need for Equipment and Inventory
Mention real estate investment and the first thing that comes to most people’s minds is the equipment and materials needed for real estate. Equipment and inventory form the bulk of the expenses of most real estate ventures. This is not only in terms of acquisition but also in terms of storage and security.
With house-flipping, you don’t have to worry about buying equipment or inventory. All you need to do is hire a renovation expert and you’re good to go. In some cases, you might only need a handyperson to handle repairs and spruce up the decor.
Eliminating equipment and inventory from your budget saves you a ton of money. It also saves you the hassle of having to keep track of everything, including expenses.
Profits Grow Exponentially With House-Flipping
You may not make as much money on your first house flip, but don’t let that discourage you. Consider investing the profit into another house-flipping project and see how it works for you. With house flipping, you can multiply your earnings with every house you flip.
Don’t stop at the first house; buy a bigger rundown house, fix it up, then sell it for a bigger profit. Continue with the same trend and you’ll be a millionaire without even knowing it.
There Are No Stringent Requirements
Let’s say you want to put up rental properties in your local area. Before you get to the dirty work, you’ll first need to get the necessary licenses and permits. Let’s not get started on all the legal work and the taxes.
House-flipping, on the other hand, is pretty straightforward. You don’t need any licenses, permits, or academic qualifications to get into it. However, you’ll need a strong mindset and a good sense of the real estate market in the area.
In some cases, it’s a good idea to hire a lawyer when purchasing the house you want to flip. That way, you can avoid any legal obstacles that may hinder you from acquiring the property. Doing so also helps you ensure that you’re dealing with a legitimate house buyer.
It’s an Excellent Way to Improve the Community
House-flipping is one of the best ways to improve your community while making a killing. Remember, flipping houses involves turning tired-looking houses into beautiful homes. It’s restoring the vitality of your neighborhood and giving it a facelift.
Aesthetics aside, house-flipping also increases the value of the properties in question. This increases the neighborhood’s wealth and earns property taxes for the local authorities. The authorities will then channel the taxes back to help build and grow the community.
What’s more, house-flipping allows you to hire local contractors and handypersons. It also lets you purchase materials from local suppliers and helps put food on their tables. You’ll be doing the community a huge favor by flipping one or two houses in the neighborhood.
Helps Homeowners That Are Going Through Financial Hurdles
House-flipping involves buying run-down houses that need a bit of fixing. Most of the time, these homes have owners that are facing bankruptcy or foreclosure. By buying their homes, you’re helping them through their financial hurdles so they can carry on with their lives.
With house-flipping, you’ll be making some good money, while helping the community at large.
Is House Flipping a Proper Investment?
After all is said and done, is flipping houses a wise investment in 2022? Well, the answer is a resounding “Yes!” With all these benefits, there’s no reason why you shouldn’t start flipping houses today.
If you’re looking to start flipping houses but lack the financial muscle, talk to us today. That way, we can get started on your fix and flip loan and start off your journey to prosperity.