There are several means to earn income from real estate investment; one such way is through house flipping. It is the act of purchasing a real estate asset, usually run-down properties that are below market price, then trying to make a quick profit out of it instead of holding it and waiting for its value to appreciate. In most cases, some additions or renovations are made to increase the value of the property.
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| Image source: rehabfinancial.com |
However, flipping comes with risk. Failure to liquidate the property within the target timeframe will result in higher incurred costs, including mortgage, taxes, and maintenance.
Thus, before even considering going through a house flip, several factors have to be considered, such as the following:
Location: Any real estate transaction is heavily influenced by location; house flipping is no exception. The city and neighborhood wherein the asset is situated should show good indications so that buyers would be enticed to purchase the said property. Thorough research and investigation are needed.
Selling price: While determining the right market for the property is needed, the right range for the selling price must also be identified. Making it too low will result in a less-than-ideal profit margin, and setting it too high might dissuade potential buyers. Various algorithms can be utilized to define the price.
Renovations or repairs: Some properties that are not in sound condition need to be improved first so that the value of the real estate asset can be maximized and relationship with clients remain healthy.
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| Image source: learnliberty.org |
Benderson Development Company is among the leading property management firms in the U.S., managing more than 40 million square feet of real estate assets. Visit this blog to read more about the real estate industry.
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