That statement alone is enough to get people involved in the action. And profits increase year after year. For years, real estate investors have enjoyed success investing homes. But today, the profit margins of house fins are shrinking.
Renovating and changing houses is a time-consuming business. Finding and buying the right property can take months. Once you own the home, you'll need to invest time to fix it. If you have a day job, time spent on demolition and construction can translate into wasted nights and weekends.
If you pay someone else to do the work, you'll continue to spend more time than you expect overseeing the activity, and the costs of paying others will reduce your earnings. If you're thinking about moving a home, make sure you understand what's needed and the risks involved. At HGTV, they make it look like creativity and a little perseverance is all it takes to solve any problem that arises during a change. Every spin is different and every investor comes with a different strategy, but the 70% rule is an almost universal standard.
If you ever successfully change a home, do yourself a favor and make room in your budget for real estate investment software or the services of a tax professional. If you're handy with a hammer, enjoy laying carpets, and can hang drywall, roof a house, and install a kitchen sink, you have the skills to turn a house upside down. When planning and analyzing profit potential, it's easy to overlook the tax implications of moving homes. You can change the values and customize your schedule so you know exactly how much you can spend and, at the same time, make a profit at each stage of the change.
Even if you're capable and willing to do much of the work yourself, every turn requires a team of professionals. These could include homeowners insurance, property taxes, utility bills, and any property maintenance you need to do before you change your property. In reality, every change comes with hidden obstacles and unforeseeable challenges that can only be solved with money to the problem. However, it's important to remember that this rule is just a general guideline and won't replace the long hours of research you'll still have to do to make sure you're not overpaying for a home you want to change.
Today's red-hot housing market has made investing in homes more popular and profitable than ever before. If inventory remains so limited in the pre-spring market, investing will be even more difficult and less profitable than it is now. If you're looking for an excuse to cut corners, deceive buyers, misrepresent your work, and handle your flip in a dishonest way, you won't be short of opportunities to point out other people who are doing the exact same thing. Professionals understand that buying and selling homes takes time and that profit margins are sometimes tight.
Even doing so, it invested about half as many properties this year as last year, due to higher costs, difficulty finding flappable properties, and supply chain problems.
