Fix and flip. Is it still viable?
If you are someone new to real estate investing the fix and flip strategy is most definitely an attractive one for those looking for big profits when the property sells. Especially with shows like Flip This House that shows these investors making some pretty healthy profits. Now these shows don't always tell the whole story as sometimes those numbers don't include other expenses such as various holding costs. Also sometimes it says anticipated profit as the property has not yet sold at the time of airing and it may still be sitting on the market. These are all variables that are not always considered. Even the seasoned rehabbers run into problems and don't always make as much as they had originally anticipated. It's definitely a strategy that I recommend for the more experienced investors who have a number of deals under their belts before they start rehabbing properties. So is this strategy still a viable one especially in today's volatile real estate market? The answer is yes, but where you are going to make your money is at the acquisition of the property. You buy a property at the right price where future value can be realized is how you are going to make your money in a fix and flip scenario. During an up market the fix and flip strategy is a great one even if you did not get the greatest 'bargain' for the property. With prices consistently going up you are going to come out smelling like roses. However in today's declining market or in some areas a flat market this is definitely not the case. When you are acquiring a property to fix and flip you need to get a property where some value can be realized and your after repair value is far greater then what your acquisition price is. This leaves room for any potential errors, overages or other unforeseen costs that were not in your original budget. Plus leave room for you to make a nice profit in the end! In today's market I firmly believe that doing a fix and flip is still viable with the right circumstances as I actively still do rehab projects in Canada and the US. Do your proper due diligence up front and factor in all potential costs that may creep up on you. Do this and you can still make excellent returns on your fix and flip properties!
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