4 Dangers In Flipping Real Estate

4 Dangers In Flipping Real Estate

4 Dangers In Flipping Real Estate
If you have recently purchased some real estate for​ investment purposes, you are in​ good company .​
Recent reports suggest that as​ many as​ 25% of​ these purchases are made by those who plan on using the​ property for​ investment purposes only .​
If you hope to​ flip the​ property there are 4 things you must be aware of​ that can put a​ crimp on your profits.
1 .​
Property Taxes.
Keep the​ property for​ a​ few years and​ you may experience a​ surge in​ property taxes especially if​ your taxes are reevaluated during that time .​
Some hot real estate markets have seen taxes nearly double in​ just 5 or​ 6 years.
2 .​
Renovation Expenses.
You may have purchased a​ fixer upper at​ a​ bargain rate .​
Once your project is​ complete will you be able to​ recover the​ expenses and​ make a​ profit especially if​ the​ value of​ your renovated property is​ above those in​ your neighborhood? In addition, can you withstand a​ correction in​ real estate values?
3 .​
Insurance and​ Mortgage Costs.
You will pay more for​ homeowners insurance if​ you do not occupy the​ residence and​ you have tenants .​
If you are financing the​ property you know that your mortgage rate is​ higher as​ well.
4 .​
Rental Pressures.
a​ market saturated with rentals will mean that the​ rents you can charge will be less than what you had hoped to​ receive .​
In some markets you are required to​ get special licensing in​ order to​ be a​ landlord .​
In other markets the​ legal rights of​ tenants mean you could have a​ lengthy and​ expensive battle in​ ridding yourself of​ a​ bad tenant .​
Will the​ lower income levels coupled with the​ added expenses drag your investment down?
Of course, you can limit your risks [and costs] by doing the​ majority of​ the​ upgrades yourself, appealing excessive property tax increases, and​ finding for​ yourself a​ trusted and​ dependable tenant .​
It isn't easy flipping a​ home, but with a​ lot of​ pluck and​ determination it​ can result in​ strong profits for​ you.

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