Flip, flipping, or house-flipping generally means the process of buying-fixing-and selling a property (usually called Fixer-uppers) in a short period of time.
There are three basic types of Flip:
- Cosmetic flip – This is the simplest and cheapest way of flipping, sometimes can only involve some paint job, new flooring, and landscaping etc.
- Intermediate flip – This may involve extensive renovation from structure demolition to adding addition rooms of the house.
- Total flip – This is basically gut out the existing house, and build a new house from scratch.
Flip can be a very attractive way to invest in real estate:
- Potential big return on investment. A successful flip can make a profit anywhere from $50,000 to $100,000, or even more.
- Quick profit. The whole flipping process general takes 3 to 6 months from buying a flipping house to sell it. The longer the flipping project stretches, the less money will be made as costs involved (mortgage, property tax, interests, and utility bills) will eat away the profits.
- Hassel free. No tenants to deal with. No worries about the long-term market ups and downs.
Most of us are no stranger to the house-flipping. Television shows such as ‘Home to Flip’ (HGTV) and ‘Flip This House’ (A&E) etc. are making potential investors to believe Flipping is the way to go for quick money.
In reality, flipping a house is not as easy as those TV show illustrated. It is more a game for experienced real estate investors. In order to be a successful flipper, you need to do a broad range of homework from target house and neighborhood, home renovation, to financing and budgeting, government zoning by-law etc.; and work with a strong team of real estate agent, lender, contractor, stager, accountant, and lawyer etc.
Most importantly when it comes to flipping, know your limitations.