October 31, 2018
A great way to make an active income through real estate investing is through house-flipping. To do this, the investor will purchase a home, make renovations and improvements to increase the market value of the home, then sell the home for a higher price. It is important to keep house-flipping as a short-term project, though, since holding onto the property without tenants makes the expenses increase. That would eat away at the potential returns once the house is sold. Some investors simply hold on to a home until they see increases in the housing market, but most repair and renovate the home then sell.
House-flipping can be an exciting endeavor, especially if you see the successes portrayed on HGTV, but it requires the investor to have a deep knowledge of real estate and financial matters to keep them within their budget and timeframe to ensure a profit. The entire burden of house-flipping falls on the investor, too. To invest in a house-flipping project, you need to have good credit and a decent down payment. With many investors now flipping homes, finding the right investment opportunity can be a challenge.
Wholesaling is another property-flipping option to consider. To do this, an investor finds a property they think is underpriced and signs a contract for it. They then try to quickly sell it to another investor at a higher price. Many times, the wholesale investor will find a property needing renovations then sell them to a house-flipper willing to take on the renovation process. The investor must simply give the earnest-money deposit and sign a contract to buy the property. They aren’t as invested in the property as other investors, so they are willing to take less of a profit to quickly turn the home. Basically, the wholesaler brokers a home sale and receives a finder’s fee for their time. That can be a risky venture, but one that many investors are willing to take to make a dollar.