In this third and final part regarding fix and flip real estate investments, we’ll highlight some of the myths of fix and flip investing.
Unfortunately, there are some myths about this type of real estate investing that can trap unsuspecting investors or deter them all together.
In this third and final post about fix and flip real estate investing, we’ll debunk some of the most common myths so that you can make informed decisions about your investments.
Myth 1
Fix and flips are quick and easy money.
While fix and flip real estate investing can be quite lucrative, there are risks, just like with any type of investment.
It takes time, patience, and hard work, as well as a good understanding of the market and what properties are worth before you begin buying and selling.
Additionally, you need knowledge on what renovations to do, how much they will cost, and how long it will take before the fix and flip can be sold at a profit.
Myth 2
The bigger and more expensive the house, the more profit that can be made.
It may seem logical that finding a bigger, more expensive home to flip will yield more profit in the end. However, this is not necessarily true.
As noted house flipping investor J. Scott outlined in his book, “Flipping Houses, How to Buy, Rehab, and Resell Residential Properties”, the average profit per-flip is about $30,000.
While this average profit figure will vary depending on what market you’re in, the basic premise is, bigger is not always better.
Also, bigger, more expensive houses can significantly limit your investing demographic. Bigger, more expensive homes also generally take longer to unload once your have completed your renovations.
Myth 3
You need a lot of money to make fix and flips successful.
Although it is true that you’ll need funds to invest, there are many ways to raise money for your deals, and it does not necessarily have to be a large amount.
With careful planning, fix and flips can be done with small amounts of capital. It’s important to know how much money you will need for each fix and flip in order to be successful.
Myth 4
Fix and flips are only for experienced real estate investors.
While some people believe that you need loads of experience to be successful in real estate investing, such experience is not necessary if you are willing to learn and put in the work.
Yes, fix and flips do require knowledge of the market. However, anyone can invest in fix and flips if they do their research and find out what works.
Even if you don’t have a lot of experience, fix and flips can still be profitable investments as long as you do your due diligence and understand the process and risks.
Conclusion
Hopefully you now have a better understanding of not only the basics of fix and flip real estate investing, but also its benefits, and some of its myths.
This type of real estate investing can be exciting and lucrative, but as with any investment, there are also risks.
You need to be sure you assess your risk tolerance, and do your homework, before diving into fix and flip investing head first.
You’ll also need to be sure you have a solid plan and team in place. This should include your relator, your contractor (definitely take the time to pick your contractor or contractors!), and your insurance agent or broker.
Be sure your insurance partner has a good understanding of the ins and outs of fix and flips, and can be another source of guidance for you on your real estate investment journey!
****This article is intended for informational/educational purposes only. It is not meant as, nor should it be interpreted as, actual investment advise regarding real estate investing of any kind, including fix and flip real estate investing*****