Flipping houses can be a solid way to generate income, but keep in mind that the earnings are often inconsistent. Flipping homes is a high-risk investment strategy with great potential, though it comes with many challenges. Flippers could be waiting months or even years to see the returns from one flip.
To lessen these risks and maintain a steadier income stream, why not add one or two rental homes to your flips? Rental properties are some of the most reliable investments, delivering long-term growth that few stocks or retirement products can match.
Is house flipping worth the risk?
The surge in reality TV shows about flipping houses has shaped an unrealistic view of the realities involved in the process. 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. Severe weather, burst pipes, and other unexpected events can lead to costly repairs that weren’t accounted for in the original budget. For this reason, house flippers need to be ready for both smooth projects and the possibility of unexpected setbacks.
The actual costs of house flipping
Even in the best-case scenario, flipping houses requires several months of work. Flipping a house requires a lot of time, from finding the property and securing financing to closing, renovating, and finally listing it for sale. During this time, no income is generated from the property, as the investor only earns a profit once the house sells.
Some investors manage to flip several homes a year, in an effort to achieve more regular and consistent income. However, more often than not, houses are flipped one at a time, making it hard to predict when the investment will pay off. For this reason, it’s crucial for house flippers to maintain multiple revenue streams. The real estate industry provides numerous opportunities, but the most stable income comes from residential rental properties. Purchasing and renovating rental homes is much like flipping houses, though it comes with several distinct advantages. When purchasing a home as a rental, investors have the option to hire a quality property management company. They manage everything from finding tenants and collecting rent to handling repairs, giving investors more free time and less stress.
Real Property Management Southeast Idaho can make managing rental properties in Idaho Falls effortless, freeing up your time to focus on other areas of your real estate investments. For more information, contact us online or at 208-522-2400. We’re dedicated to helping you optimize your real estate investments.
Originally Published on June 28, 2020
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