4 Dangers In Flipping Real Estate

If you have recently purchased some real estate for investment purposes, you are in good company. Recent reports suggest that as many as 25% of these purchases are made by those who plan on using the property for investment purposes only. If you hope to “flip” the property there are 4 things you must be aware of that can endanger your profits.

1. Property Taxes. Keep the property for a few years and you may experience an increase in your property taxes especially if your taxes are reassessed during that time. Some hot real estate markets have seen taxes nearly double in just 5 or 6 years.

2. Renovation Expenses. You may have purchased a “fixer upper” at a bargain rate. Once your project is complete will you be able to recover the expenses and make a profit especially if the value of your renovated property is above those in your neighborhood? In addition, can you withstand a negative correction in real estate values?

3. Insurance and Mortgage Costs. You will pay more for casualty insurance if you do not occupy the residence and you have tenants. If you are financing the property you know that your mortgage rate is higher as well.

4. Rental Pressures. A market saturated with rentals will mean that the rents you can charge will be less than what you had hoped to receive. In some markets you are required to get special licensing in order to be a landlord. In other markets the legal rights of tenants mean you could have a lengthy and expensive battle in evicting a bad tenant. Will the lower income levels coupled with the added expenses severely decrease your return on investment?

Of course, you can limit your risks and costs by doing the majority of the rehabbing yourself, appealing excessive property tax increases, and finding for yourself a well qualified and dependable tenant. It isn’t easy flipping a home, but with a lot of research and determination it can result in outstanding profits for you.

Leslie West Flips Real Estate. Submit Your House, Land, Apartments, Self Storage for a Fast Offer!