As the real estate market starts to gradually cool down from the insane influx that we saw in 2021 and 2022, it has left a lot of investors wondering if house flipping is still a viable way to net a profit as we enter the new year. Certainly, I can understand why this is such a concern. There are even economists who are predicting that we may see another housing market crash similar to the one back in 2008.
However, examining the current trends and looking forward, I think that might be a bit of a doomsayer’s perspective. Real estate can certainly still net a profit for those looking to flip properties. In fact, it is hard to say that it will ever truly go out of style, considering the fact that there are people who are always looking to buy a home. Sometimes, it is simply a waiting game in terms of finding the right customer.
That leaves us with one simple question…is it still worth trying to get into the real estate game right now? I know that the news currently shows a lot of doom and gloom, but to what extent is that just the media being, you know, the media? That’s what we’ll be looking at today.
What is House Flipping?
First things first – what is house flipping, anyway? It’s pretty simple. Basically, it is when you purchase a property that needs some work done on it for the purpose of renovating it and then listing it back on the market.
Now, if you are still not entirely clear on all of that, don’t worry. You can check out a page like this one, to get an idea of what the process is. It’s been pretty popular for a few years now, even inspiring video games and television shows.
It has often left me wondering whether or not it’s really such a profitable or exciting avenue of work. That definitely is something that you want to consider before you bite the bullet – it will work. Hard work, in fact, depends on how hands-on you want to be.
Is it rewarding, though? For the most part, the answer to that is probably gonna be “yes.” Just remember that you will only get out of it what you put into it, so that can play a big role in whether or not you will personally find it to be rewarding. Just keep that in mind as I explain a bit more about how it works, and what the markets look like right now.
What is Involved?
As I mentioned above, there is going to be a lot of hard work that needs to be done. Now, you certainly do not have to do it all on your own – you can hire a contractor to complete the difficult tasks like fixing plumbing, electrical wires, and more. Contractors make the work go by faster (and are necessary in some cases), but they will increase your overall costs.
Sometimes there will be a thin margin between your costs and your profit, but that is the name of the game, unfortunately. As with all types of investments, there is a level of risk here. After all, house flipping is thought of as a type of investing by many folks – so, be sure to understand that you may not always reach all of your financial goals this way.
Thankfully though, there are tons of resources at our disposal to help us get started. For example, there is a podcast that Jake Leicht hosts that I have listened to a few times as I started to delve into how house flipping works. While we don’t really have to use those types of sources, it can be helpful whether we are just getting started or are total pros at this stuff.
So – delving into some of the particulars, what can you expect from a house-flipping project? Renovations are pretty much always going to be involved, although they could be as simple as applying a fresh coat of paint in a few rooms and changing cabinet fixtures. However, for the real fixer-uppers, you may have to knock down walls, fix insulation or foundation problems, or more.
My advice? Don’t let these sorts of projects intimidate you – at least once you’ve got some experience under your belt. Often, taking on these fixer-upper properties will end up garnering you the largest profit margins. Since they are typically sold as foreclosures by banks or for generally low prices, that means that you have more cash flow to make improvements and thus resell it at a much higher figure.
Of course, when you are new to house flipping, that may not want to be the first type of property that you go for. Instead, opting for some of the easier jobs may be a better idea at that stage. After all, you are essentially eating the costs for that initial property purchase – it is probably a good idea to have it be a more surefire way to make some money quickly rather than a long-term type of situation.
Is House Flipping Worth Your Time?
While I know this answer can be annoying, a lot of it is going to come down to your own personal preferences and values. A lot of people underestimate the time investment that house flipping is – really, it becomes a full-time job for many of those who end up seriously pursuing it.
If that sounds like something that you want to do, or that you are willing to make the time commitment for, then yes – it probably will be worthwhile! As long as you go into it knowing what to expect (at least to a certain extent), then you can start the process confidently.
Consider checking out some of the resources that I have offered today, and study up on the interior design trends for 2023. They might just inspire you if you’ve been hesitant before, and that’s the most important part of flipping properties.