Investing

How Does Flipping a House Really Work?

By on June 27, 2013

Flipping a house is becoming incredibly popular again, but for those recently looking to get into real estate investing, it may seem complicated. Those new to the industry may wonder how it works, how it is different from other investment strategies and what its benefits are?

Industry insiders classify flipping a house as buying, renovating and reselling a home.

The extent to which homes are improved can vary widely from ‘prehabbing’ (clearing out and creating a blank slate) to modest cosmetic home improvements like painting and landscaping. Experienced investors may prefer full on remodels with new roofs, additions and kitchens.

Some of the reasons real estate investors choose to flip a house are associated with their preferred investing strategy. These may include: speed of seeing returns, avoiding the risk the of long term holding, capturing larger lump sums of cash in the short term, and because it is a lot of fun and therapeutic.

There is nothing wrong with building a portfolio of rental properties, building new homes, investing in mortgages or most other real estate investing strategies. It is important to determine, whether or not, flipping a house is right for you.

Wholesaling homes, or simply flipping real estate contracts can be profitable as well. However, those addicted to flipping houses prefer that they are able to get in and revitalize communities and create profits in any market.

Flipping a house is a great way for investors to diversify from these other real estate investing strategies while generating wealth. It can increase profits, recapitalize and boost funds for rentals and allow them to flex their creative muscles.

However, one of the best reasons to make it your initial focus as a new real estate investor is the ease of entry. Without making it sound too good to be true, flipping houses really can be done with little money out of pocket, even with poor credit and for fast profits.