While house flipping is a lucrative business, it’s the business part separating novices from the experts. Besides, the business part comes with disadvantages overlooked or undetected by house flippers. It’s imperative for home flippers to think carefully about these findings before venturing into this business.
With or without a home inspection, unexpected losses pop up in any direction. Delays, theft, and hidden home repairs turn a wonderful house-flipping project into a nightmare. Delays revolving around permits, building codes, contractors, material delivery/installation, weather, illness, and machine malfunction can eat away at finances and time. Just-discovered repairs such as mold and asbestos can throw a tight schedule off its course or make a delayed schedule more hectic. Meanwhile, criminals view home flipping as a theft opportunity. Don’t be surprised if break-ins revolve around outside opportunists and inside jobs.
In the Red
While the phrase ‘no risk no reward’ is beneficial when a sale is hot, not all house flips are successful. Houses sell for a lower price than expected or take longer for a buyer to purchase it. The unpredictable real estate market can equally affect a sale. Alternatively, house flips could end in the red after owners pay federal, state, city, and property taxes, making a good sale bad.
Lack of Buyer Interest
Convincing buyers to pick this home over rivals on the same block, neighborhood, or city is challenging. Home flipping owners must continue to advertise, which is costing more money each day buyers don’t respond. Meanwhile, home flippers are paying a mortgage on a home that’s temporary. As money leaves, desperation takes its place, causing owners to reduce the asking price just to get rid of it. Finally, owners pick up the slack on yearly taxes, monthly home insurance, and regular home maintenance costs due to lack of buyer interest.
The three disadvantages above plus financing, contractors, and deadlines equal stress. Naturally, stress isn’t good for any home flipper because it leads to physical, mental, and emotional health concerns such as obesity, depression, asthma, heart disease, diabetes, and Alzheimer’s. While home flipping experience reduces stress because the challenges become commonplace, it’s hard for first-time flippers to adjust.
Disadvantages give home flippers the reality behind the dollar signs. Ground dreams of grandeur and creates a flexible renovation plan to conquer upcoming surprises in home flipping.