Like so many other Anglo-Saxon concepts, real estate flipping is a practice that originated in the United States and can be applied to any type of asset, although in this case it is applied to real estate, and consists of buying an asset in order to resell it as soon as possible and make an immediate profit.
At Lasose Properties & Investments we tell you about the concept of real estate house flipping so that you can discover a new way of investing.
The real estate flipping or ‘flip house’ could be translated in our language as “flipping or changing houses”, and basically consists of buying a house to make a profit by selling it during a maximum period of between two months and a year.
To be successful at this practice however, different factors must be taken into account:
- It is essential to analyse and know the real estate market in order to find good deals, including auctions and foreclosures.
- In order to get the best return, it is not only necessary to find a property at a good price, but also to take into consideration all the additional costs of sale and purchase and taxes, and the reforms that may need to be carried out.
- The investor (flipper), will need to be responsible for improvements once they have bought the property, in order to sell more quickly and at a better price.
- The whole operation should be carried out quickly and efficiently, starting with the purchase of the property. Renovation works should begin immediately in order to be able to place the property on the market as soon as possible to ensure maximum profitability.
Before embarking on this adventure, it is very important to evaluate the property before buying. This will allow for a more realistic analysis of the needs of the property, and therefore of the budget required. It is also essential to take into account the property location so as to avoid the risks involved in real estate flipping. Some of these are: the loss of money due to unanticipated expenses, a surplus of supply in the market meaning prices have to be lowered, or that, on the contrary, taxes increase along with the costs of maintaining the property while we are still looking for a buyer.