Property flipping is one of the investment strategy in property investment field. It can make a significant profit to property investors if the flip goes well, but its risk is relatively high as well.
This will all fall down to if you are in a position to take the chance as the house flips are 50-50 of ability and your luck. If you choose to property flipping, there is one principle that you should abide which is buy low, sell high. There are 3 types of properties that you can flip a flop.
➊ Foreclosed/ Auction Properties
This is the popular type of properties that the property flippers like to look for. This type of properties are usually repossessed by banks due to the previous owners inability in paying the monthly loan installments. Therefore, the banks take back the property and put up for auction to fill in their loss of profit.
Remodeling of the house is essential, as the previous homeowner may have not have the financial aspect to up keep the house. The costs of remodeling is depending on how bad the property condition is. If the condition of foreclosed property is really bad and you can see that you definitely need to do a large remodeling, it is advisable to give up of this property (no matter how low price it is) and look for other property.
Before buying a foreclosed property, set a budget for how much you are prepared to spend to get this property. But if the price is out of your budget (after inspections), it might be the better choice to forget about it and look for other properties.
➋ New Development Properties
If you’re plan to buying a new development property, as the obvious states, you have to deal with developer. In general, you are able to get the properties below market prices from the developer itself.
You can make profit out of the purchased property if it is done in the right way. For example, you can sell it off to the secondary market once the property is completed as the property price may have already increased in value.
➌ Fixer Uppers
An older house usually in need of renovation, its typical called as “fixer-upper”. In property investment, a fixer-upper is a rundown property that require a lot of maintenance work. This kind of property can be buy in at lower price. But, do aware that the costs of renovation may take away your profit in the future.
Before buy a fixer upper property, you have to know some knowledge regarding home improvement as it literally need to be repaired from top to bottom of the house.
If you plan to choosing this type of investment strategy, it is advisable to set a budget for yourself and have a proper investment plan. For property flipping, most of the property need to be repaired and renovated except new development property. Therefore, you need to prepare 2 portions of money spending, one is for property purchase, another is renovation work.
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