This year, 2016, was a very good year for real estate investors. Those who were able to finance investments (or had access to buyers’ money) and were able to fix and flip properties in the first quarter, received returns of almost 50%. RealtyTrac reported homes flipped in the first quarter of 2016 yielded an average gross profit of $58,250. This is the highest average gross flipping profit since the fourth quarter of 2005.
Aside from high profits, there are other reasons this real estate investment strategy is attractive. For one thing, it’s cheap. Usually, a more manageable upfront investment and less financing from lenders are necessary. This evens the playing field, allowing people at most income levels to enter the business.
Even if an investor is starting out with empty pockets, cash buyers are looking for hands-on partners. Sometimes, these relationships provide financial support until an investor can go out on his/her own and other times the partnerships last years.
While real estate investment offers great potential for making money, the fix and flips variety of real estate is not for everyone. It might be cheap and quick, but it does not come without a little work.
The fix and flip strategy yield relatively quick results. In many cases, it takes about six months to fully rehab and sell a property. Sometimes less. This is attractive because a quick turnaround means an investor’s capital won’t be tied up indefinitely and their money will be free for the next investment. And since the successful fix and flip investors hold onto properties for a relatively short period of time, they’re unlikely to be affected by market fluctuations. They’re also free of the stress and frustration of long-term homeownership. They buy low and sell low.
While real estate investment offers great potential for making money, the fix and flips variety of real estate is not for everyone. It might be cheap and quick, but it does not come without a little work. Enthusiasm will not carry you. Eager people with limited experience can make huge mistakes and mistakes can be costly.
Knowledge can help ensure your dream doesn’t collapse into a nightmare. Learn everything you can about this strategy and then apply it. Follow our blog for helpful tips and information.