Flipping houses is a profitable business that can make you a lot of money. However, not every house flip is created equal. The key to success in the house-flipping world is knowing when the property you are looking at or you just bought may not be the best investment after all. Below, you will find three signs that may be telling you that it’s best to walk away from a prospective flip.
First, you can never judge the value of a house in a vacuum. You always need to take into account the surrounding neighborhood and area. It’s also not enough to only look at comps of your property when deciding if the flip is worth it. The other thing you need to be aware of are any new real estate developments that are being built nearby your prospective flip. The simple truth is that new developments are more attractive to potential buyers due to the fact that the houses, townhomes, or apartments are move-in ready, modern, and most likely offer amenities. New real estate developments can make it harder to sell your flip when you’re done, so sometimes walking away is a better course of action.
Next, serious structural issues are costly, and the associated costs may make those houses not worth the time and effort to repair for someone in the business of flipping houses. When researching and looking over a potential flip, there are several signs that you need to watch out for. For one, look for signs of any water or fire damage. Usually, damage caused by floods, leaks, or fires is not limited to one room or area, and often, there are hidden issues lurking in the house due to this damage. Also, a compromised foundation can be an absolute deal breaker. While sinking or cracked foundations can be fixed, the additional costs those fixes will add to your budget can mean that your profits will be non-existent.
Last, you will want to walk away from a potential flip if you can’t get the right finance option. Predatory financing in the form of high-interest loans can hurt your bottom line. These types of loans could end up costing you in the end, especially if your flip inevitably runs into other problems. Also, if you’re working with investors or you create a partnership, make sure the terms of your relationship and arrangements are clear. Getting into debt or working with people you don’t fully trust are never a good idea when it comes to flipping.
Source: The Flip Side Of House Flipping—What You Need To Know About Owner Financing
Walking away from a potential flip can be the best way to go if there are new developments nearby, significant damage, or you can’t get the right finance option. While it can be a fun and even potentially lucrative project, this is one investment you shouldn’t take risks in.
Flipping the house is just part of the project. Once it’s done, you need it to sell — and preferably sell well. That’s where we come in. Book a professional real estate photo shoot today!