NewburyportNews.com, Newburyport, MA

Real Estate News

May 4, 2012

Things to Consider Before Flipping a Home

Syndicated —

Source: Monroe Real Estate.com

It's tough to resist the entertainment factor in those reality TV shows like "Flip That House." But here's a little secret you may not know: Not everything on TV is as it seems.

In fact, I would guess that based on my experience of watching people try and flip properties for profit, 90 percent who try it once never attempt it again.

I'm not saying it isn't possible for this to be profitable, and I know people who do it full time and do make money at it. But the odds are highly against the average person succeeding. However, if all those reality TV shows have piqued your interest, here are a few items to consider if you want to attempt this strategy.

Buy Low, Sell High

First, you will have to buy a property at significantly below market value or sell it above market value to make money. If you buy it and sell it at the market, you will lose money due to commissions, time, and renovation costs. So your best bet is buying a property below market value. That's not simply below what it sold for four years ago, it's below what is the current market value after taking into account all the distressed property sales in the area. And if it's a decent property, you're probably going to be fighting many other individuals trying to buy the same house. And when lots of people are vying for one piece of real estate, the price gets bid up and you probably are going to pay market value.

Recouping Value

What about adding value with a renovation? While there is no question you can add value by renovating a property, you probably will not add more value than the cost of that value. (Check out the Hanley Wood estimator, especially "cost recouped" column.) You might put in a $20,000 kitchen that only adds $15,000 in value. More than likely you will go way over budget on the rehab and spend way more than the value you add.

Text Only | Photo Reprints
Real Estate News

Offbeat
NDN Video
Justin Bieber In Calvin Klein Underwear Shoot Samsung Pre-Trolls The IPhone 6 With New Ad Jimmy Kimmel Introduces His Baby Girl Swim Daily, Nina Agdal in the Cook Islands Guilty Dog Apologizes to Baby for Stealing Her Toy Prince George Turns 1 and is Already a Trendsetter Train Collides With Semi Truck Carrying Lighter Fluid Kanye West Tells-All on Wedding in "GQ" Interview Tony Dungy Weighs in on Michael Sam Scarlett Johansson Set To Marry In August New Star Wars Episode XII X-Wing Revealed Obama: Putin must push separatists to aid MH17 probe Michigan inmates no longer allowed to wear orange due to 'OITNB' Adam Levine Ties the Knot Sebastian The Ibis Walks Beautiful Bride Down The Aisle | ACC Must See Moment NASA Ceremony Honors Moon Walker Neil Armstrong Faces of Souls Lost in Malaysian Plane Crash 105-year-old woman throws first pitch Man Creates Spreadsheet of Wife's Reasons for Turning Down Sex 'Weird Al' Is Wowed by Album's Success
Special Features
NRA Waterfront Plans