Even with all the ups and downs of the real estate market, house flipping remains a lucrative endeavor. That said, anyone who’s been at it for a while will tell you that there are a lot of misunderstandings that could cost newcomers big-time. And the last thing you want is to purchase a house (even at low cost) and then go way outside your budget fixing it up, or worse, not be able to move it come sell-time. If you’re willing to put in a little work and flip houses the right way, here are 4 house flipping myths that must be avoided:
1. It’s a ‘Get Rich Quick’ Process
House flipping is nowhere near as easy as it sounds. The whole reason many houses are able to be purchased for lower costs is because they need quite a bit of work done before they become attractive to the market. It’s important to do your research on each house before buying and evaluating whether or not you are able to devote the time and money needed to fix it up.
2. A Coat of Paint Will Do the Trick
Going along with the above, it’s crucial to take a look at the actual structure and any hidden damage. Simply covering it all up with a fresh coat of paint and some other strictly cosmetic fixes can result in even costlier fixes down the line, or even a lawsuit if you portray the house to be something that it’s not. House flipping really is about fixing existing problems. There may be electrical, plumbing, insulation or other issues that need to be addressed before you can sell.
3. A Foreclosed House is a Great Flipping Option
At a glance, a foreclosed house may seem ideal because it can be purchased for cheap. However, it’s important to do your research first and have an in-depth inspection done. Houses are foreclosed because the people who lived there could not meet their mortgage payments or ran into other financial difficulties. This means they also likely let expensive fixes with the home slide and may have neglected its upkeep. There may even be some hidden issues neither you or an inspector will see right away.
4. You Absolutely Must Sell the Home
Did you know it’s actually just a myth that you need to sell the home at all? It’s important to take a serious look at the local market and gauge what your selling prospects are like. In many cases, it can actually be more lucrative to fix up the house and then rent it out to tenants. While you may not make a profit upfront, renting out the house long-term is means of bringing in steady income and can even result in bigger profits eventually.
The Bottom Line
House flipping is not for everyone, and it is not a project meant to be taken lightly. Many people work in house flipping as a full-time job, while others view it as a part-time job or serious hobby worthy of their time and efforts. If you’re willing to do the same and understand the myths, you can also reap the financial rewards that come down the line. If not, it may be wise to look into other endeavors.