When you look at an older house with weathered paint and woodwork, do you see potential? If you’re not scared of the work it takes to strip a house of its defects and build it up stronger, brighter and ready to sell, then you might just be ready to join the nation’s booming crowd of house flippers.
House flipping continues to trend strong. The practice has recently eclipsed its 2006 levels, and Philadelphia has proven to be one of the nation’s hotspots. But while the city has often offered some of the country’s best returns, it’s important to remember that there are risks to flipping a home, as well.
Know the risks before you start
As Mortgage News Daily reported, the current trends in house flipping suggest that flippers are making their profits by adding value to the homes they buy and sell. Doing that takes money, and if you’re not careful, a project can quickly spiral out of budget.
Beyond your budget worries, you might face other trials that might be less common, but still worth noting:
- Getting robbed: What happens if a burglar smashes your new windows to rip out your copper pipes?
- Animals: Birds, raccoons and rodents are frequent visitors to the run-down houses some flippers covet.
- Sloppy titles: If you experience any difficulty showing clear ownership to the home and property, you may want to pursue a quiet title action.
- Market slowdowns: You don’t have a profit until you have a sale. And sometimes you don’t have a sale. Can you adapt and convert your property to a rental?
As Philly.com wrote in a 2017 article, even the professional flippers featured on television will falter at times. Managing your budget to leave extra room could be a good idea. You might also want to consider forming a Limited Liability Company (LLC) for the enterprise to limit your personal liability.
An adventure that comes complete with hard work
House flipping can be hard work, and newcomers might be surprised by the challenges they face. But they might find other surprises, too. The story in Philly.com noted that one flipper discovered an original Model T Ford abandoned on the property she was flipping. While your property might not yield surprises quite like that, you’re bound to have an adventure flipping it, and in the end, you’ll have something real and beautiful to pass on.