Why You Should Flip a House in Your Own Market

by c21commonweath_ldowling 14. October 2019 12:58

Do you want to get into flipping houses? You aren't the only one. You can hardly turn on the TV without seeing a show about house flipping. These shows are compelling to watch, and they’re inspiring many people—in 2016, more than 6% of all home sales were house flips.

House flipping shows have made a real impact, but that doesn’t mean everything about them is realistic. Many of the difficulties in flipping are glossed over for the sake of fitting the story into a 30-minute episode, and of course, the flippers always win in the end. Things aren’t so simple off screen, but there are steps potential flippers can take to increase their chances of success.

Easy Mistakes to Make

Flipping houses can be a profitable business. Unfortunately, there are many ways for it to go wrong. Here are a few common mistakes first-time flippers make:

Ambitious Budget

One can quickly get carried away by the dream of making simple profits. It's easy to underestimate the cost of repairs and overestimate your eventual selling price. Unrealistic expectations may lead you down the pathway to disaster.

Overestimating Your Skills

Many house flippers go in thinking they will do much of the work themselves, forgetting that the houses with the most potential are selling cheap for a reason. They often need significant repairs that are beyond the reach of most DIYers.

Lack of Experience

If making money were easy, everyone would be rich—the most successful among us build their knowledge and skills over time. Consulting more experienced flippers is a good idea when you’re getting started, but get comfortable with the idea that you won’t know everything you need to know right off the bat.

The Right Way to Do It

It’s easy to get excited about house flipping and jump into a project you aren't ready for. The most important thing to remember about house flipping, at least when you're starting out, is to stick to your own market.

When you try to work outside your market, you’re more likely to have a limited understanding of the potential value of your property, the potential cost of repairs, and what homes are most likely to sell quickly.

How do you gain the insights you need about your market? Many rookie home flippers start by working with a local agent. An experienced agent can help you target the properties that work with your budget, your experience, and your plans.

Flipping houses is an exciting, possibly lucrative investment. The potential for profit has attracted many would-be investors and driven an entire segment of entertainment. Unfortunately, just like many things on TV, house flipping is oversimplified. It's easy to get started on a project only to find out later that the profits you were dreaming of never materialize. The best way to avoid this fate is working in the market you know best: your own.