The real estate industry in the United States is a significant contributor to the economy, both through its direct impact and indirectly through its multiplier effects.
The real estate industry plays a vital role in facilitating homeownership, a critical component of the American Dream. However, despite this dream, homeownership rates in the US have declined in recent years. The reasons behind this are numerous and complex, but they can be broadly categorized into two main categories: affordability and access to credit.
Access to credit has become more complex as lenders have tightened their lending standards in the financial crisis. Additionally, the cost of housing has been rising faster than income for many years now, making it increasingly difficult for potential buyers to afford a home. This makes it hard for investors to get into real estate, especially amateur ones.
Thankfully, there is a simple and cheap way to start a business in real estate that doesn’t need you to have a property or a lot of money: house flipping.
What is House Flipping?
House flipping is buying a property, usually at a discount, and then selling it for a profit. The key to success in house flipping is buying low and selling high. This can be done by finding properties that are undervalued by the market, negotiating a reasonable price, and then making cosmetic improvements to the property to increase its value.
Here are five reasons why it’s worth it, starting with it being an excellent alternative to purchasing a new home outright.
It’s a good alternative
Home prices are at an all-time high, with new homes costing between $300,000 to $400,000. That’s a lot of money, and most homebuyers don’t have much luxury. This is why flipped homes are so hot right now.
Investors can buy an older home at a much lower price, often less than $100,000. Then, by fixing it up and flipping it, they can sell the house for a considerable profit, sometimes as high as $50,000 to $60,000. You can also sell it much faster than new homes because of people’s demands for new homes.
Certain sub-markets in house flipping can also make a ton of money. For example, expert loft conversions can earn you $50,000 to $100,000. Many millennials are looking for lofts that can accommodate their current lifestyle, making this sub-market a lucrative one.
It’s an investment
When you purchase a property to flip, you’re making an investment. Unlike purchasing a new home, which is more of a consumption activity, flipping a home is an investment that can provide you with substantial returns.
With the current state of the economy, many people are looking for ways to invest their money. The stock market is volatile, and many people have lost faith in it. House flipping provides a tangible asset that you can see and touch, which makes it a much more attractive investment for many people.
It’s a relatively low risk.
Compared to other investments, such as stocks or bonds, house flipping is relatively low risk. This is because you’re investing in a physical asset rather than a piece of paper that can be worth nothing tomorrow.
Additionally, you’re usually not putting all your eggs in one basket with house flipping. You’re typically only investing a small amount of money into each property, so even if one deal goes bad, it’s not going to ruin you financially.
Another reason why house flipping is so good right now is that you can learn a lot about the industry without spending too much. In fact, you can even learn as you go.
You’ll quickly learn about the ins and outs of real estates, such as how to find good deals, how to negotiate with sellers, and how to finance your flips. These are all valuable skills that you can use in your future career in real estate. It’s a great springboard, and a cheap one at that, to real estate success.
Fun and Exciting
Last but not least, house flipping is just plain fun and exciting. You get to use your creative juices in every house flip, and you never know what you’re going to find. This excitement is the reason why so many celebrities are flipping houses.
Plus, it’s a great way to meet new people. You’ll be working with different contractors, real estate agents, and homebuyers, which can create a great network for you. Who knows, you might even find your next business partner in one of your flips.
If you’re looking for a new challenge and an opportunity to make some good money, then house flipping is definitely worth considering. Just be sure to do your research and have a solid plan before you get started.
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