Many have heard of property flipping, but few really know how flipping — also called fix and flips — actually works.
At its most basic level, flipping involves purchasing investment properties with the intent of performing improvements to raise the value of the home or other property. Then, the property is re-sold for a profit.
Real estate flipping does require a fair amount of investment capital. Therefore, some property investors opt to get involved in wholesaling first, which enables you to move properties and earn a profit by serving as a middle-man of sorts. Wholesaling involves a minimal capital expenditure, making it a popular choice amongst investors who are seeking to gain investing capital for future investments such as flipping.
As with any investment, there is a degree of risk associated . The amount of risk is determined by several factors such as the current real estate market conditions, the future real estate market conditions, the value of the property, the amount of rehabbing required to get the property into prime condition and the price paid for the home (especially as it relates to the property value.)
It’s important to understand the amount of work (and the cost of that work) required to get a home into optimal condition prior to sale. Underestimating the amount of rehabbing required to get the property into good condition can cut into profits. This is where it helps to work with a seasoned rehabber or consultant, who’s adept at determining the cost of improvements.
Moving the property promptly is also key, as you don’t want to have your money tied up in the property for an extended period of time. This is why it’s important to choose strong real estate markets such as the market in Chicago, where you’ll encounter many buyers who are ready to close a deal.
If you’re ready to get involved in property flipping in Chicago or the surrounding area,you’re invited to complete an investor’s form to get started.
Questions about getting your start in real estate investment and flipping? Contact Greg Teele with Teele Enterprises, Inc. at 224.343.6890.