“Paul, you are so conservative, why shouldn’t I flip a home?”

Flipping to make easy money?

Flipping housing is an easy way to lose money. A little like Vegas.

Go to Vegas, Flip a House - Neither is "easy money."

 

There has recently been a “get rich quick flipping homes seminar” being advertised on radio in Lexington.

People who know me well and people who don’t but read my blog regularly have been asking me why this is not a good time to flip homes.

Why is flipping so risky?

First of all let me say when I warn about flipping homes I am warning the novice that has been persuaded that it is an easy way to get a quick return on their money.

WARNING – It is not easy to flip homes and make money.  There are experts that do it but all of them have learned a few painful lessons on the journey.  If you have money to invest, if you are a good negotiator, if you are good at doing much of the remodeling yourself, if you have the extra time and if you have patience then yes your chances of making a  profit flipping homes greatly increases.

You make  money if you buy low enough.

Even with experience home flippers will pay too much for a home and end up losing.  The key is to make sure you get a great buy.  If you pay too much for the home you will never make money.  I currently am renting a home because I paid too much for it and I do not want  to take a loss on the home.  If that happens to you can you afford to rent the home or will you have borrowed money and pay interest to keep the house?  If you are paying interest it may be wise to sell your home at a loss.

Buying and holding may be the best way to make money on a home in today’s Central Kentucky housing market.

If you have money that is sitting in a bank drawing one percent interest and you want to broaden your portfolio of investments then buying a home that you hand onto for a few years and then sell could be a very good investment right now.

Prices of homes in Central Kentucky are about what they were in 2004.  In the past fifty years homes have increased in value at about three percent a year in Kentucky.   If that holds true then buying a home, renting it a few years and then selling it may be a very good investment.  

Buying a home to hold and sell in the future is very different than buying and selling quickly to make a nice quick profit.  There are some great buys right now and I will help you find something you can afford if you are serious about investing in real estate.  If you are serious about flipping I will help you but I will also continually caution you that flipping is a risky business.

 

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