Property Investment: making a choice between Flip and Fixer homes

Flip and fixer homes are terms often used by real estate investors.  Flipping is purchasing homes from distraught home owners and reselling them at a much higher price.  Would you believe that people in the flipping business earn thousands of dollars in a single deal alone? 

Not all homes that are being sold at an extremely discounted price necessarily mean that they need major repairs or have to be refurbished.  Several homes are actually close to perfect, but they just need to be sold urgently.

Distraught home sellers usually have no choice but to sell their homes at a low price so they can dispose it as quickly as possible.  Many property investors take advantage of the situation and immediately purchase such properties in cash.  If you want to be in this kind of business, you should have ready cash or a mortgage that is on stand-by.

While many property investors choose to flip homes, there are also those that profit more from fixer homes.  In fixing homes, property investors purchase homes from distraught home sellers and make necessary repairs or renovations on the homes and then sell it at a profitable price.  Let me give you a concrete example.  You found a fixer home that amounts to $100,000 with a required down payment of 5%. 

In your assessment, you will spend around $2,000 on repairs and $3,000 additional payment for the property.  All in all you will spend $10,000.  Now that the home is already in an excellent condition, you can now sell it at $160,000.  So, you have a net profit of $50,000.

When handling fixer homes, make sure you have ample knowledge regarding home renovations and repairs.  It is also a must that you dedicate enough time to it and that you have the skills to market it fast.  Otherwise, you will not be able to maximize your profit.  You should also bear in mind that you can hire professionals to get the job done a lot faster.

Setting a price on a home seems easy, but you actually need the help of an assessor, real estate agent or a loan officer.  Putting a price tag on a property will also need you to conduct a research.  Know the average market value of properties within the area where the property stands so as to avoid overpricing. 

If you intend to invest on properties, whether you’re going to flip them or fix them, the important thing is to sell the properties as quickly as possible.

[posted by : OFP on Jun. 10, 2011]


TAGS: investment, real estate, property, flip, fixer, home

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