Fix & Flips were very popular in the 2000's and provided ample entertainment on numerous tv shows that glorified this incredibly risky business. Most people don't realize this but fix & flips really are quite risky investments compared to the stability of fortune 500 companies and numerous other investment strategies that are not quite as fun. For those of you not yet in the know, a fix and flip is where a person buys a home that requires a lot of work to be done to it and they buy it at deep discounts because of the massive amount of work required. By fixing the property in a short period of time, they then turn around and sell the home in a matter of a few weeks, (hopefully), and turn a profit of whatever the difference is between the total cost and what they sell it for. There are numerous ways to finance fix & flips, or at least there were before the meltdown that occurred in 2008. Before then, credit was relatively easy to get and home prices were going through the roof. Some might say that home flippers had something to do with the out of control home appreciations that occurred. That is not something I am willing to speculate on at this point, but I am sure it would make a great topic in the future.
So, we come to the question, do home flipping strategies actually work. According to the television they really do and work well. A little deeper digging reveals that many people have actually lost their shirt in the real estate market because of such a risky investment. I personally have met two people who lost more than everything they owned in real estate. I have not met anyone who has made it big in real estate. Anecdotally, the odds are not good that I will be very favorable towards fix & flip strategies. For the most part, I really enjoy shows like Flip This House or Flipping Out, but I find their production to somewhat show only the positive side of flipping and not how many people fail using these strategies. I can't tell you how relieved I am when they get to the end of the show and say, “Congratulations, your house is now worth $50k more than what you put into it.” I am a little incredulous that they pulled such a wonderful stunt, but then I turn to myself and remember those are numbers that are just thrown out by a real estate agent and do not reflect what the house actually sells for. Maybe I'm just a little hard on this, but I just have real trouble seeing how a house can be worth so much more after so little time. Personally, I'm used to investments that take several years or at least months to pan out. The idea that I can buy a house and sell it for more in less than two months just doesn't seem really realistic to me. In any case, I am still going to try and figure this out.
One of my favorite websites is DIYnetwork.com. It is a great place to go for home improvement ideas, which would be wonderful if one is lucky enough to be able to afford a house. Home improvement is one of those things that can be enjoyable if you can get the end result you want. Oftentimes it is just better to leave it to the professionals. But then again, if you left everything to the professionals, where would the profit be? In their pocket. Exactly.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment