Flip This House! By Dexter Stoakley At Isnare.com Ezine Articles

A recently well publicized phenomenon in the real estate world is the concept of buying a house for cheap, fixing it up, and then selling it at a profit- known as “flipping”. This is not a new concept, but the idea is gaining in popularity as it becomes the topic of a wide variety of television shows and documentaries. This article outlines the basic idea behind the flipping concept, as well as some observations about where the money seems to lie and how to get the best value.

Start low, aim high: The fundamental concept of the flip is making a profit by buying a house at a low price based on projects that must be done in order to get it resellable, then doing the work and putting it back on the market. The process involves three stages: Shopping for the location, fixing the place up, and the resale. All three are critical factors. It will do no good to buy a mobile home located out in the boonies that no one in their right mind would buy, Instead, houses within shady neighborhoods are purchased at low prices and fixed up, though the expectations are small. Houses can be purchased at prices as low as $35,000. The key with these houses is that they will sell at a much higher gain, percentage wise, than other market areas. Simple renovations can lead to an increase of 100%- turning the $35,000 into $70,000. The key in this process is to keep track of any costs of renovations. The most important step when it comes to residential real estate selling is the perception of the buyer. Many houses are undervalued because of poor appearance during the bid. Often, there is nothing structurally wrong with these residences, they just appear downtrodden. A little bit of cleanup and beautification, as well as some incisive last minute decorating, are usually enough to net a good profit on the residence.

Setting Long Term Goals: Once you have flipped the first house, turning around and investing all of the money into a house that can be marketed to the next step up is critical. You will have a little more money to invest in the house in the first place, as well as for renovations. An interesting fact about flipping houses is that the market seems to stall around the middle ranges- the very center of middle class housing. Whether buyers in this market are more stingy or the houses themselves are hard to fix up, many house flippers will run into a wall with the middle ranges. It is best to concentrate on either the lower class or Upper middle class and higher residence if you are hoping to make a profit.

Know Your Market: Whichever market you choose to cater to, it is essential that you know the type of customer and house you are dealing with. Lower class housing will offer a higher percentage in terms of turnover in most cases, but will also net less profit in the long run. Houses in the upper niches will take a more serious investment, in terms of both money and time, but they will also net a bigger profit in the end.

If you choose to try a hand at house flipping, it is important to start within your means and work your way up according to the profits that you gain. Remember that there is a dead zone in the middle class range, so do not waste a lot of your time and money in this niche.

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