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Most people get introduced to real estate investing via infomercials or those do it yourself reality shows. They make it look easy. Next thing you know, every guy in town is trying to get into the big house flipping craze. The big time gurus that you see on TV do make money, but now they make money selling their “system”.
In reality, real estate investing can be difficult. You need experience, or lots of experience around you to help you through the highs and lows of property investing.
Most TV shows show you run down houses that need some TLC and the people on the show are going to fix those homes up and sell them for a huge profit. Everyone calls them fixer uppers. Investors have been dabbling in fixer uppers for years. You buy a run down property, throw some cash at it, then a few weeks later, sell it for profit. You could probably go on Amazon.com and find dozens upon dozens of books on how to flip houses for a profit.
Oftentimes beginning real estate investors don’t do enough research before jumping in. They end up being surprised by hidden costs and delays, then end up losing money on the deal. You MUST do your research.
The key with flipping houses is to keep costs to a minimum. To the work yourself when you can and try to negotiate good terms when hiring contractors. It also doesn’t hurt to have good people doing the work for you. They will get the work done in a timely fashion in hopes to get more work from you. I have seen it many times, an inexperienced investor hiring someone because they were cheap, then the workers either take forever to get the work completed or the just quit showing up altogether.
Usually the people that have the most success with quick house flips are those that have a lot of experience to make the repairs on the house. They end up saving themselves quite a bit of time and money.
Another thing you might notice is that a lot of people who flip homes are real estate agents or brokers. They are saving themselves money by not having to hire listing agent to sell the property. That can save several percent in costs all by itself.
Some people may be better off buying a property that doesn’t need a lot of work. That way they won’t have as many unexpected costs. Remember, the more you money you have to put in, the less leverage you have.
