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The Downside of House Flipping

Construction worker plastering and smoothing concrete wall in room of flipped home.While flipping houses can bring in substantial income, one fundamental point is that the earnings are not consistent. Flipping homes is a high-risk investment strategy that offers strong potential but comes with many difficulties. Investors may face delays of months or even years before realizing profits from a single flip.

To lower these risks and establish a more reliable income, you could add one or two rental properties to complement your flips. Rental properties are a highly stable investment, providing long-term growth that’s often unmatched by stocks or other retirement options.

Is house flipping worth the risk?

The rise of reality TV shows about house flipping has led to an unrealistic view of what flipping homes truly involves. Although it’s possible to buy, renovate, and sell a home quickly and for a profit, it’s important to recognize potential challenges and unforeseen hurdles.

For example, properties under construction are frequently targeted by vandals and thieves, potentially causing expensive losses. Severe weather, burst pipes, and other unexpected events can lead to costly repairs that weren’t accounted for in the original budget. For this reason, house flippers should be ready for projects that go smoothly and for the possibility of things going wrong.

The actual costs of house flipping

Even in the best-case scenario, flipping houses requires several months of work. The process of flipping a house is time-consuming, from finding a property and securing financing to closing, remodeling, and eventually putting it up for sale. While the house is being flipped, it doesn’t generate income, as the profit only comes after it’s sold.

Certain investors can flip several houses a year, with the goal of creating a more consistent income stream. However, more often than not, houses are flipped one at a time, making it hard to predict when the investment will pay off. This is why it’s important for house flippers to have additional sources of income. The real estate industry provides numerous opportunities, but the most stable income comes from residential rental properties. Buying and renovating rental properties is quite similar to house flipping, but it offers some clear advantages. Investors buying a home to rent out can benefit from hiring a reputable property management company. These companies take care of tasks like tenant placement, rent collection, and property maintenance, saving the investor time and reducing the stress of managing rentals.

Real Property Management Washington DC can make managing rental properties in Hillcrest effortless, freeing up your time to focus on other areas of your real estate investments. For more information, contact us online or at 202-813-9993. We’re here to assist you in getting the most out of your real estate investments.

 

Originally Published on June 28, 2020

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