By Mike Baird
You might see all of the outrageous shows on home improvement networks documenting the processes of home rehab and flipping. Watching these programs may give you the impression that it’s easy money for anybody who’s handy, but there are a number of challenges and skills required to successfully make a business of it and choose the right homes to invest it.
If you are thinking about going for it, though, you’ll need to decide whether you plan to sell the home or maintain the property as a source of income. If you plan on the latter, you should assess the following criteria to see if holding an investment property is truly the right choice.
What Are Your Qualifications?
Our team includes a licensed real estate agent, investor and all-around expert counsel. Our knowledge has grown exponentially since starting on this endeavor, but we were able to get started because of our prior experience. Before making the jump to invest in a rehab property, honestly ask yourself what your qualifications are. You should have some knowledge of real estate, property management or construction and renovation. If you don’t have any such experience, you’re likely to make rookie mistakes and feel overwhelmed by the process.
Are You Connected to a Strong Network?
No, we aren’t talking about your cell or internet. Are you acquainted, rather, with the professionals in your local market who can help you access resources in the investment property business? Many people underestimate the power of such connections, but they are, in fact, quite powerful. It can be risky to take on an investment property project in an area where you don’t have a solid network of support, but if you’ve established a circle of contractors, realtors and other supportive professionals, you will have an easier time getting the project done.
Do You Have a Good Grip on the Financial Aspect?
In some ways, investing in a property and reselling is an easier way to profit. The numbers are right in front of you, but if you plan to hold the investment property, you have different things to consider. In order to successfully invest in a flip, you need to have a good understanding of the cost of your rehab and the monthly income necessary to earn back your investment. Calculating these numbers on the basis of estimates can be difficult, but if you’re planning on making a business decision on a property, it’s an essential skill.
Are You in it for the Long-Haul?
Although a good rehab can garner great profits, it certainly isn’t a get-rich-quick-scheme. This is especially true if you are planning on holding rather than selling an investment property. Don’t waste time on such a project if you don’t have a lot of patience.
Flipping a property is hard work, and you will likely be left with frustration and disappointment if you expect it to be easy or immediately lucrative. Your persistence will be rewarded, on the other hand, if you invest your time and energy in anticipation of a long-term payoff.