House flipping can be a lucrative business, but there are risks involved. Successful entrepreneur, investor, and real estate expert Peter Bowen offers insight into the industry and helpful tips for investors who want to maximize profits while avoiding common yet potentially devastating pitfalls.
One of the biggest mistakes home flippers make is purchasing a home without carefully checking out the home, local neighborhood, and city-wide home market. Careful research is imperative, especially in 2022, as experts are already predicting the housing market will be vastly different from the real estate market in 2021.
Interest rates are set to rise this year and could hit up to 4.5%, directly affecting lower-middle-income, middle-income, and first-time homebuyers who could wind up priced out of the market. At the same time, home values will likely not appreciate as quickly as they did last year, which means that flippers won’t have to make an immediate offer and purchase in order to avoid losing a potentially lucrative real estate deal.
In addition to familiarizing themselves with the local market, Peter Bowen notes home flippers will also want to research their target demographic. Flippers operating in middle-income areas, for instance, should know what middle-income homebuyers expect from a new home. Is an open floor plan a must?
Do buyers want ample closet space, a large yard, or a swimming pool? Lower-income buyers with a limited amount of money to spend maybe happy to forgo a few “extras” in order to keep the home purchase cost as low as possible; in such instances, it may be best to pay attention to boosting curb appeal by planting bushes and flowers and giving the home exterior a fresh coat of paint.
Another aspect of careful planning is accurately assessing ahead of time how much it will cost to repair a home before it can be resold at a profit. Many flippers lose a considerable amount of money because they underestimate how many repairs are needed and/or the cost of these repairs.
Thankfully, this problem can easily be addressed by having a go-to team of contractors who can provide fast and accurate estimates for repairs and renovations. The team should also be able to handle a range of home repair and improvement jobs to ensure the house can be flipped without undue delay.
The real estate market is continually changing, and a wise home flipper will conduct continual research to ensure he or she is making the best investment decisions. One reason why Peter Bowen has been so successful throughout his career is that he is willing to adapt and make changes in order to meet market needs and consumer expectations.
While it is impossible to avoid all mistakes when flipping homes, successful home flippers who regularly turn profits do so because they thoroughly research their market and target demographic, carefully check out homes before buying them, and have a reliable team of contractors to help them repair and renovate homes quickly, so they can be sold at a profit in a relatively short period of time.
