Flipping Houses: Don’t Be Daring, But Smart With Real Estate Investment

I won't lie to you: flipping houses can be risky. Actually, it is risky. You can hit it big, though, if you know what you're doing, know the market like the back of your hand, and have been at it for a good number of years. Stellar negotiation skills, too, would help tremendously.

You Do Need Some Cash in Your Pocket for the Real Estate Investment

So recognize the risk there when it comes to real estate investments, particularly of the more upscale properties. You're basically paying for something that might not sell. Are you okay with that? If yes, great. If no, okay. The good news is you have a market that's saturated with high demand for rehabbed homes. Just look for the markets where the prices are climbing. Your chance of finding a buyer willing to make an offer to recoup your investment just might be good.

Watch the Real Fixer-Uppers, Though.... Don't Fall Into the Money Pit

The problem many flippers have, though, is the fact that some renovations just get way over their head. There are numerous problems:

• Deadlines
• Additional Costs
• Extra Manpower

And it's like quicksand. You have a goal in mind, but the house is so far under that you end up spending more than you had budgeted out, and before you know it -- you're way too high in the market, and you'll never find a buyer worth the green. It's not a pretty situation to be in.

Instead, Be Strategic, and Look for the "Cosmetic Fixes"

Ugly ducklings don't have to be ghastly geese. If the cosmetic repairs won't cost a whole lot (not cheap, of course, because you want it done right and well) and, more importantly, can be done quickly, congratulations: you've found a flip that most likely will result in substantial profits for you.

Just make sure the comparables in the neighborhood and the market itself shows an increase in pricing, because you will have no doubt that real estate agents for buyers will view the numbers and ensure that those individuals make the best offers.

Do the numbers, subtract your selling and buying costs, contractor expenses, and always figure in your profit margins at 15% to 20%, and you'll have a clear idea of what you're looking at -- within deadlines, without headaches, and with happy thoughts -- well before your flipped house goes on the market.

That being said.... It's easier said than done! Although, I'll say this: you're up for the challenge, aren't you?