Flipping houses can be a solid way to generate income, but keep in mind that the earnings are often inconsistent. House flipping is a high-risk venture with great potential, though there are many obstacles to overcome. It can take investors months, or even years, to see profits from just one flip.
To offset these risks and create a more consistent income stream, why not invest in one or two rental properties along with your flips? Rental properties are considered one of the most dependable investments, providing long-term growth that is seldom matched by stocks or other retirement products.
Is house flipping worth the risk?
Reality TV shows on house flipping have created a skewed perception of what flipping homes actually entails. While flipping homes can be quick and profitable, it’s essential to stay aware of potential setbacks or unexpected challenges.
One example is that homes under construction are often more vulnerable to theft and vandalism, which can lead to expensive losses. Harsh weather, burst pipes, and other unforeseen events can cause expensive repairs that were not part of the initial budget plan. House flippers need to be prepared for both when everything goes right and when unexpected challenges occur.
The actual costs of house flipping
Flipping houses, even in ideal circumstances, involves months of effort. Flipping a house requires a lot of time, from finding the property and securing financing to closing, renovating, and finally listing it for sale. Throughout this time, the property doesn’t generate income because profits from a flip only come once the house is sold.
Some investors can take on several house flips in a year, aiming to create more consistent and frequent income. Yet typically, houses are flipped one by one, which makes it hard to gauge when the return on investment will occur. That’s why it’s essential for house flippers to have multiple income streams. The real estate sector has various opportunities, with residential rental properties offering the most consistent income stream. The process of buying and renovating rental homes is comparable to house flipping, though it has several distinct advantages. Investors who buy a home to rent out can work with a trusted property management company. These companies oversee tasks such as tenant acquisition, rent collection, and maintenance, easing the investor’s workload and reducing stress.
Real Property Management Hometown can make owning rental properties in Malvern incredibly easy, giving you the time and freedom to focus on other parts of your real estate portfolio. For more information, contact us online or at 501-701-4702 or 501-303-6870. We’re dedicated to helping you optimize your real estate investments.
Originally Published on June 28, 2020
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