Real Estate Flipping – Is Flipping Real Estate the smartest way to get started in real estate investing?
“Flip This House”, “Flip That House”, “Property Ladder”,… and on and on…
Over the past couple years you and I have been hammered on TV with real estate flipping shows that depict these people making outrageous profits flipping homes and making it look easier than heck.
So, is this flipping stuff real? Well… it sure is. There are countless people out there making a darn good living flipping homes. But… the tv shows on flipping are darn deceiving when it comes to the “reality” of real estate flipping.
Is flipping real estate the best way to get starting in real estate investing? I’ll let you decide for yourself. However, in my opinion, for most people, especially in today’s down markets (not all markets are down… there are actually some doing really well), real estate flipping is not the best way to get started in real estate investing.
First, let’s clarify two kinds of flipping.
- The Fix and Flip – Where you buy real estate, rehab it, and sell it to a retail buyer. The kind that is on the TV shows.
- The Wholesale Flip – Where you buy real estate (or get it under contract), find a wholesale buyer, and flip the contract. The kind that is less glorious… but has a ton of money in it… with a heck of a lot less risk.
To me, the Fix and Flip method is not for most newbie’s… even though that is the kind of real estate investing you see on TV all of the time.
- You need a good understanding of rehab costs
- You need to have good funding… either from a private lender or a bank (private lender is preferable)
- You need to be able to float the carrying costs if you can’t sell the property quickly
- If you don’t calculate your costs just right… there may not be a whole lot of room for error… and room for error means greater risk on you!
- The market is in a downturn… so there are less retail buyers out there for middle income houses… which is what most people start out flipping
There are many people out there making a very good living flipping… but most of them started several years ago… and have many flips under their belts.
They already have systems down, have marketing channels for getting buyers, have solid lending sources, etc. Not to say that new real estate investors cannot do all of the above… YOU CAN!