July 18, 2019
The Stress and Expense of Flipping
In our previous blog, we discussed who people choose to partner with in order to make a house flip a reality. There we made mention of the tendency of house flippers to mainly use their own savings to undertake the flip, but also that about 30 percent of flippers (according to a recent Porch report) borrow from a bank. Fewer borrow from private lenders or from family—amounting to only 6.2 percent for each of these categories.
The Porch survey asked respondents how much their most recent house flips cost them, and how much they earned from the flips. The amount of capital required for the flip averaged in the range of $50,000. The purchase cost of the most recent homes they would flip was $100,000. The renovations averaged at about $27,250. And the average sale price of the most recent flip was $180,000. This put profits at a solid $52,000, which means the average house flipper more than doubled their capital investment—though just barely.
Important to note is that, though the house flipping trend is again on the rise, profits aren’t rising in tandem. As ever, despite the impression that the average viewer may get from shows about house flipping, buying a house cheap and then selling it for more is far from an easy way to make money. Renovations on average don’t amount to much (see the amount above), but if the amount of renovations are underestimated in the initial cost estimate, it can mean all the difference for how much profit is achieved. It is generally a wise idea to have someone experienced at assessing the extent and cost of such renovations involved early on. This can save a flipper from loads of stress later on.
Speaking of stress, the management of a house flipping project creates a significant amount of it. About 90 percent of the survey respondents considered the project management to be quite stressful. 85 percent of them said the same about a project’s constructions elements. So much rests on completing the project on time—particularly profits—but the average project saw delays of around 17 days.
Whether you’re looking to buy-to-flip in Westchester, Massachusetts; West Palm, Florida; or Newport, Rhode Island, you’ll need to make sure your investment is not threatened by defects in your ownership of title. At Topouzis & Associates, P.C., we delve deeply into the history of your properties in order to ensure that your property-based income will not be hindered by past issues with ownership, and we provide the Title Insurance to back our assessments. Contact us to ensure that you are covered in case of surprise.
