Posted on: 6 September 2016Share
Maybe you enjoy do-it-yourself projects and are ready for the challenge of fixing up and then selling -- sometimes called flipping -- a house. Or maybe you've spotted a real estate deal that's too good to pass up, and you think that a little elbow grease and some help from a knowledgeable contractor could make the house you've found a great candidate for making some money.
Is a Home Flip Smart?
While people have been buying, fixing, and selling homes for years, flipping gained popularity about 10 years ago with the advent of numerous "how to flip" television shows and websites. Officially, a flip is any property sold for the second time in a 12-month period, and it's on the rise again after dipping down when home prices fell around 2012. Currently, about 6.6 percent of all single-family residences are flipped.
Whether flipping a home is a good idea depends on several variables.
- What the housing market looks like for your community. Middle-sized to larger cities are often the best places to flip homes because of the demand and higher home prices.
- Whether you can do the work yourself or must hire it done. There's nothing wrong with hiring a professional contractor, but doing so will eat into your profits.
- Whether you can find a good deal. Home prices are rising, but if you can locate the ideal property that is reasonably priced, and you work the numbers to determine you can make money after completing the necessary repairs and remodeling, it could be a worthwhile project.
How to Flip Smarter
When you buy and sell properties, you open yourself up to the possibility of legal issues. One bad investment can not only prevent you from making money on that specific house, but can cost you additional money and time. To save yourself from unwanted legal issues, use a real estate attorney to ensure that there are no undesirable surprises in the buying and selling processes. An attorney can help you:
- Create entity documents
- Review loan documents
- Evaluate purchase and sales contracts
- Understand the closing process
- Deal with any title issues, including liens and boundaries
The added expense of a few hours of a real estate lawyer's time is small compared to the time and money you will spend if there is a title issue, for example, and you find that there are back taxes owed on the property. Smart investors enlist the help of an experienced attorney to ensure they don't run into these problems, which can drain away your profits.