These days, TV shows about home buying, remodeling, and flipping are about as common as shows about various law enforcement agents who go around solving crimes. If you’re not a purveyor of cable TV, that means there are a lot of remodeling television programs. The people on TV make the process look so easy. They win the bidding war for the house, fix it up, and flip it, usually for thousands of dollars of profit. However, this line of business comes with a lot of risk.
On The Lookout For The “Sweet Spot”
Real home flipping experts know that successful house flipping requires patience, practice, and a little luck. They are always trying to hit the “sweet spot” which means, “the right purchase price, not overspending on renovations, and the right sale price.”
Real-Life House Flipping
One father-son team, Michael and Larry Malashock, recently bought their own fixer-upper in St. Louis for $34,000. They’re estimating their renovation price to be somewhere in the neighborhood of $160,000 and similar houses in the area are going for $250,000 to $290,000. For people new to flipping houses, the Malashocks recommended you “set aside extra money for inevitable surprises and painful lessons.” They also suggested that if you can, try to self-finance instead of taking out a loan. Paying that mortgage payment along with interest can cut into your profit margin very quickly.
Another expert, real estate agent Terry Yuede, cautioned people to keep in mind it’s not like you see on TV. “You can’t go watch a couple of episodes of HGTV and think that you’re ready to flip a house because there’s a lot to it,” Yuede said.
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