House flipping is all the rage these days. But while you may love the idea of refurbishing an old home, it can be a risky venture, especially for novices, and few people get rich doing it. Ever wondered if you should take a chance and have a go at it? Ever wondered how much flippers actually make relative to how much work they put in?
Earnings, on average
House flippers can make a lot of money if they play their cards right. The average gross profit margin for a flipped home is , and you can make even more if you flip houses in the $100,000 to $200,000 range—they have a . While these are average earnings, flippers can, of course, make much less or more, depending on their skills. Finally, how much you make can also . If you choose an east coast state like Maryland or Pennsylvania, for example, you may have a quicker turn around. Tennessee, New Jersey, and Louisiana are also flipper friendly.
Who succeeds at flipping houses?
Flipping houses is hard work. Perhaps this is why are unsuccessful. Of that 40%, 12% break even or see a loss, while the remaining 28% have a . Since most flippers must spend 20-30% of the purchase price on repairs, your gross profit should be 30% of the purchase price at a minimum.
And the 60%, you ask? Successful flippers have a few things in common. First off, they have enough money. Real estate investments are costly. Even if you get a great deal on a foreclosed home, repairs add up, and extra money is also useful if the house doesn’t sell immediately post flip. Ideally, you have tens of thousands of dollars available for expenses after you buy the home. Time is also crucial. You should have multiple months put aside to search for the right home, fix it up in an efficient fashion, schedule inspections, and then sell it of course. Additionally, being knowledgeable about real estate helps a lot. Knowing the best times to buy and sell, as well as what constitutes a fair price can make all the difference in the world.
House flipping may be risky, but it’s so very worthwhile when it works. Take your time to learn best practices before you take the plunge on flipping your first home!