The Pros and Cons of Flipping Homes In Chicago
A typical real estate investment strategy nowadays is house flipping. This is when a real estate agent or an investor decides to purchase a cheap and rundown property, possibly making improvements to it, then flipping it by selling it for a nice profit. Though flipping homes come with great rewards, they are also one of the more riskier types in real estate investing methods.
Typically an investor can look for homeowners who are about to drown on their mortgage — from one of the many places where you can find flipped real estate properties in Chicago. In 2016 13% of their property owners had mortgages greater than their property’s market value, creating a well of opportunity for investors seeking out distressed homeowners facing foreclosure and offering them instead a deal they cannot refuse.
Yes opportunities still abound in the Chicago real estate market. Use the services of an experienced real estate company like Kale in order to make a short list of the most suitable properties for you to get invested in. This is still a buyer’s market in Illinois, so there is no need to rush to buy anything, just follow the best offers, make a counteroffer and hope that you can get a great deal from a desperate seller.
In conjunction there are many homeowners in other states in the U.S. experiencing the same issue. This resulted in many real estate agents hustling more than ever to flip more homes. Before you let home-flipping shows entice you to join this industry, consider the pros and cons of this type of investment.
Pros of Flipping Properties
Compared to stocks or other types of real estate investments that would take years to grow, the profit from flipped homes can be undeniably quick. Because repairing a house or property is faster than building a new one, there is a possibility that you will find yourself pulling in a considerable amount of cash flow within a year, so long as the market remains hot and the flipping goes smoothly.
Being Your Own Boss
Being your own boss is within certain limits as some states would require you to adhere to some strict zoning ordinances and other requirements. Moreover some cities also have their requirements and permits when working on a house. Even so you still maintain a vast degree of control over the decision on how the property should be repaired or flipped.
Working With Your Creativity
There are different kinds of investment, but flipping is a home where you literally dedicate your own hands, soul, sweat, blood and tears. The work is hands on. This makes you more cautious with the money you pour in as the project’s capital. Many skilled carpenters find flipping homes not just an investment but a pasttime to get their creative juices flowing and working with their skilled hands.
While many of America’s workforce work on eight-hour jobs behind a desk, many flippers find themselves enjoying the physical labor of the process. The work entails engaging in physical labor in exchange for tangible financial results. If you are someone who has always preferred to stay active, loved revving up power tools and never backs out from physical labor, this type of real estate investment may just be your next valuable past time.
Cons of Flipping Properties
There is a reason why contractors are needed when building homes. You are very likely to need to hire outside help for the other aspects that go along with home flipping. These include home demolition, electrical wiring, gardening, piping and other facets that involve intense home remodeling.
You will soon realize that when you flip a house, the costs can add up much quicker than you expected. The truth is, flipping homes will require you to shell out a tremendous amount of capital, especially for properties that genuinely need a rigorous haul. For some investors it would mean taking out loans with interest rates. For others it might take a while to finish the project and miss the market opportunity. It is up to you if you will take the risk.
For some first-time house flippers who are not accustomed to physical labor, they may end up hiring professionals to rebuild a property. The physical labor will include carpentry, installing floors, painting, cabinetry, plumbing, electrical wiring and other countless construction skills. If a flipper cannot take the physical labor himself, the only reasonable solution is to hire a professional to get the job done.
Real estate may return your efforts into big bucks, but it is a risky business in its own right. When you have the skills needed to flip a home without requiring a professional, then you might find your first sale soon. However there are a variety of things that could go wrong during a flop. One of which is the volatility of the market, and the amount of money you spent to improve the property before flipping it.
Before you proceed with this risk, you must be prepared to walk away from a project that can potentially cause you to lose a lot of money. To prevent this from happening, you need to prepare an intensive plan to ensure that the amount you spent on the property will not exceed its fair selling price.