The first quarter of 2015 showed an average gross profit of over $72,000 on house “flips,” and if you’re like most people with an entrepreneurial spirit, you might be thinking of cashing in on something like this. However, it’s important for you to know that house flipping is more complicated than just buying and selling a home – and reality TV shows don’t really depict the process accurately.
Should You Buy and Flip Houses in Middle Tennessee?
If you’re thinking about buying a home in Middle Tennessee so you can fix it up and sell it quickly, ask yourself:
- Where are you planning on buying and flipping property? Purchasing a house at the top of the price range in an upscale neighborhood means you are relying on that area’s property values to increase, not remain stagnant.
- What trends do the experts say are going to affect the future of the real estate market? When the market is good, experienced house flippers see money growing on trees. When the market drops, those same trees can be quite bare.
- What’s your game plan? Some house flippers like to a purchase a fixer-upper for a cheap price, make repairs and then sell it. You’ll need a timeline and a budget so you can ensure you don’t get in over your head.
Potential Drawbacks to Flipping Houses in Tennessee
Even a perfect plan can go wrong—budgeting flaws, timing problems, a sudden increase in neighborhood crime—leaving you with a house that won’t sell.
If you’re thinking about diving into the market, know that:
- Your expenses could exceed your returns. Unforeseen costs, taxes and other fees can add up quickly. Remember, the longer it takes to flip a house, the more money you stand to lose.
- You may have to pay capital gains taxes on your earnings.
- The real estate market fluctuates. If your three-month remodel turns into a thirteen-month overhaul, a home you expected to sell for $480,000 might only sell for $400,000.
Advantages to Flipping Houses in Tennessee
Aside from the pleasure of improving a property, you might enjoy these added benefits:
- You can profit without financial contributions. If you partner with investors and provide the sweat equity, you might not need to contribute any of your own money.
- House-flipping can be an excellent short-term investment. The average return on investment for house flips in the first part of 2015 was 35.1 percent.
- You can maximize your return with the right people on your team. If you work with a good Realtor®, you can find properties that need a little work priced much lower than other homes nearby. In many cases, you’ll be able to list and sell these homes for a tidy profit—even if property values remain flat.
What Kind of Home Are You Looking For?
Let’s talk about how I can help you find the right home for your needs. Call me at 615-473-5973 or get in touch with me online. I’ll start looking for properties that match your criteria right away.
