![]() You may be able to use equity from a rental property you already own or get an investor for private funding. You’ll also have to come up with the cash to do the work on the property, pay contractors, maintain the utility bills, and cover closing costs.Īlong with planning for everything above, you’re going to need a contingency to tap into if things don’t go according to plan, which is almost inevitable. For real estate investors, it’s not uncommon for mortgage lenders to want a significant down payment of 25% or more. That doesn’t mean you can’t work around this, but it’s something to be mindful of. Some flippers can pay cash for properties, but if you can’t, it can automatically put you at a disadvantage. These considerations have to be weighed against the possible listing price. With each home you buy you have to think about the property’s actual value, current conditions of the market, comparable home prices, and how much you think it’ll cost you to make repairs and upgrades. You need to do the math before bidding on a property to know the highest price you can pay and still make a profit. Tax lien properties, wholesale properties, and short sales are other options. Some of the ways you can gain leads for properties well-suited to flipping include looking for probate properties, going to auctions or keeping up with foreclosure lists. Your goal with flipping isn’t to let the property appreciate slowly-it’s to sell quickly. You have to find neighborhoods that will appeal to buyers, but you need properties that are going to be priced below market value in that area. Many homes are not a good investment in terms of flipping. The following are some of the most significant challenges you might face along the way if you flip a property. If you’re considering wading into the flipping world, when you’re realistic about the challenges, you’re already putting yourself in a better position to deal with them.
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