(Newswire.net — February 8, 2021) —
Flipping homes has become the new craze across the nation. There has been an increase in those indulging in this profitable concept, making it seem so easy.
Although almost anyone is capable of flipping real estate, there is a lot to consider before diving in head-first. Yet, there is no denying that there’s more certainty in your returns than in other investments.
What is House Flipping?
To flip a house is to buy a property and then sell it for a profit. This, however, needs to be done in a short period to be classified as “flipping.” The period could vary between a few months with a maximum of a year.
House flipping can be done in two ways:
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A home purchased by a real estate investor is renovated, which increases its value and then resold for a profit.
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The other option is when the property is bought and then kept for a while until its value increases and then resold at a higher price.
Like with most things financial related, there are the pros and cons. Let’s look at what these are when it comes to flipping homes.
Pros and Cons for House Flipping
Pros
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Profit
Those giving this investment their full attention can generate quite a bit of profit in a short period. This, however, has to be done the correct way. When it comes to the GST, you might be eligible for a rebate, depending on the size of your renovation. Goodservicetax.com can help you with more information.
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Experience
No matter the outcome of your venture, the experience gained from flipping a property will be invaluable. You will be learning how to negotiate, whether it’s for the property or the materials needed in the renovation.
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Satisfying
Being able to transform a run-down or neglected property into something “new” is a rewarding and satisfying accomplishment.
Cons
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Making a Loss
There is also a fair amount of risk in flipping homes. Purchasing a house on auction could come with unexpected flaws that you could not have foreseen. This results in unbudgeted repairs to be done.
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Tax
If a house is flipped after owning it for less than a year, you will not qualify for a lower tax rate, which will result in less profit. Keeping it for an extended period, a year or two, before reselling will result in a reduced tax.
If you face any HST tax issues, you should perhaps consult with a competent and experienced lawyer.
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Stress
There will be times when things will not work out as planned, which could cause some anxiety or stress. There is also the case of not having enough funds to complete a particular renovation or the construction workers who do not complete a job on time.
Take Away
House flipping seems like a very lucrative investment. It is something you don’t need experience for and is open for anyone to try.
As you can see, there are advantages and disadvantages of attempting to flip a house. Although it comes with a fair amount of stress, it can also bring in a considerable profit.
The decision to flip or not to flip is now in your hands. Make the most of it!