The house flipping industry is pretty big, and I know many investors who have made it their main source of income. I understand why it’s attractive, especially to new investors or someone looking to turn a quick buck. Flipping can be profitable, but it’s not for everyone. In fact, I don’t recommend it for most investors.
On this episode of Investing in Real Estate, I’m going to share why I advise steering clear of flipping houses. I’m going to share how flipping can actually be a detrimental real estate strategy if you’re looking to save time, avoid risk, and gain a steady income. Click play to learn why flipping houses is a bad idea!
More About This Show
Time
Those who have flipped houses know that it can be a full-time job where you are ultimately trading time for dollars. Flipping entails finding the right deal, researching markets, months of renovations, inspections, finding a seller. If you’re trying to move away from trading time for money because you’re more interested in passive income, then flipping houses may not be right for you.
Risk
On the surface, it may appear that flipping houses is consistently lucrative, but if you dig a little deeper, you will see that there is a great potential to lose a lot of money with each flip. If you’re not an experienced flipper, and you don’t like to take chances with your money, flipping houses may be a bad idea. Simply underestimating the renovation and repair costs can put an investor in the red as far as profit is concerned. In addition to this, if the flipper estimates the total value of the renovated property to be higher than its market value, it can turn into a huge loss when the property is sold.
Source of Income
If you are looking for steady, reliable income, flipping houses could be the wrong investment vehicle for you. Because of the points I preciously mentioned on how you can lose money due to certain situations while flipping a house, it can set a flipper up for inconsistent yearly income. Additionally, house flipping is highly competitive, which can make it more difficult to find profitable flips. It’s just far too inconsistent. So, if you prefer steady cash flow that comes in like clockwork, then it may be a bad idea to start flipping properties.
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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