Career Advice on Flipping Houses: Pros & Cons of Real Estate Investing Refurbishing Fixer-Upper Homes
A Pacific Northwest resident and his family (who prefer not to be named) have made a living by renovating real estate for over seven years. They buy fixer-upper and near-foreclosure houses, renovate and fix them, get them from dallas real estate agents looking good for sale, and sell them at a profit.
Renovating houses sounds fairly simple, and maybe even a little glamorous, but what are the pros and cons of what is commonly called flipping houses? Following is information derived from interviews with the above-mentioned investor and his family.
Advantages (Pros) to Home Renovation as a Living
- Real estate investing offers a fairly flexible schedule where one can work odd hours, take time off as needed, and often have time for other interests in between projects or home showings.
- Flipping houses has the potential for unlimited income. This depends on one’s financial situation, skill in evaluating real estate for purchase, knowledge of home renovating, negotiation skills, and a little luck.
- Home refurbishing offers the chance to work as a family (if one has family), including involving older children and teaching them valuable skills.
- One can choose to work alone or with others.
- Partnerships can be formed for one or more projects, for money, support and expertise.
- Flipping houses means being one’s own boss.
- Renovating homes can be enjoyable. It can be fun and rewarding to take a run-down property and bring it to its former glory or improve a neighborhood.
Disadvantages (Cons) to Flipping Houses as a Career
- Investing in real estate takes a lot of money. Cash, credit, or other sources of money are needed for expenses such as escrow and loan fees when buying, large amounts of cash if properties are to be purchased without a loan, renovation supplies or subcontractors’ fees, monthly mortgage and utility expenses, and more, including usual costs of running a business.
- Besides investment and business expenses, one must consider the money needed to support one’s family (or self) when a regular paycheck is not coming in.
- For the self-employed, health insurance can be difficult and costly to obtain.
- Real estate investing can be very stressful as many decisions involve high stakes and monetary risk.
- It takes a keen eye to locate a good deal on a house. Many people underestimate the costs and overestimate profit after taxes.
- Often, selling even a very nice house is difficult. Markets change, prices change, and investors sometimes pick a house that lacks something buyers want.
- Even with a prior home inspection, fixer-upper houses may still have problems that get missed or come up during renovation.
- Often people think flipping a house means doing a bit of painting, planting some flowers, and doing some cute decorating. In real life, there are often large renovations to do, big problems that do not show up until the buyer’s inspector looks over the house, and a lot more physically demanding cleaning and fixing than one might expect.
Tips for Flipping Houses
- When deciding about getting into home renovation or flipping houses, do a lot of research online and in books.
- Find good, trustworthy advisors, such an honest real estate agent, a good loan officer, and, if possible, a mentor or two.
- Find the best, fastest, and best-priced subcontractors possible. Ask around for references.
- Timing is very important in real estate investing. Pick the right time to buy and sell, do home improvements as quickly as possible, and advertise the sale of the home immediately.
Real estate flipping is not for everyone. It is best for those who can take the stress of risk, have some cash to possibly lose, and who work well without a boss keeping tabs on them. This is a job that requires a strong stomach, a strong body, and a disciplined mind.
