Many people know that investing in real estate is a good idea. However, most individuals don’t know where to start. We see millions of shows on television, such as HGTV Flip or Flop. The high stakes money involved and stress are enough to make one thoroughly scared of investing in property. Flipping houses may be great drama on television, but it is really not for the novice investor for many reasons. Some of these reasons include the lack of funding, the lack of knowledge of construction, and the lack of other resources to flip a property quickly.
The main reason why most people love the idea of flipping properties is the potential for a big return. Say you pay $200,000 on a tear down property and building a million dollar home, the return can be enormous. However, the risks that are associated with it are also very high. If you don’t do it correctly, the results could be financially devastating.
For novice investors, it may make more sense to go with the strategy of turning a B property to an A property. The return isn’t as great, but the risk is also reduced. The theory is to buy a property that is nice and rentable as of right now, but to add the amenities to increase the rent or sale price of the units. This can be done by adding certain stainless steel appliances, granite countertops, and hardwood floors. Even recess lighting can increase the value of the home. The construction time is going to be much quicker than tearing a place down and rebuilding it, which will allow you to rent or sell the house in a quicker period of time. At the end of the day, you want to try to make money as soon as possible.
Flipping properties remain a good way to make money, however, flipping properties isn’t for everyone. If you are new to investment properties, don’t feel as though flipping is the only way to make money.