How long does it really take to flip a house in today’s market? Perhaps even more importantly, why is it important to know how much time it should take? Understanding the market and how it works is critical. Make sure you know what to expect when flipping a home.
The Rising Popularity of Flipping Houses
With the economy expanding and markets improving, house flipping in the United States is gaining a lot of traction. While some have turned to flipping houses because of what they have seen on TV, others have been turned onto the huge profits that can be made. Then there are those who can’t continue with the alternative: a 9 to 5. Even in Virginia, which has typically seen the lowest unemployment rates, recent figures show jobless rates pushing 7 percent. From an investment stand point, it is really difficult to mimic the size of returns and cash produced by flipping houses elsewhere. Essentially, flipping homes is too profitable for many to ignore.
The Importance of Timelines in Flipping Houses for Profit
The time frame from contracting on a home to reselling it for a profit is incredibly important for real estate investors. Experienced investors understand the concept of a schedule, but it is vital for newer real estate investors to understand the time constraints proposed on a flip. As I am sure you have heard before, time is money. The real estate investing business has everything to do with time.
Holding a property requires additional costs every day. Aside from all the direct costs of rehabbing, it brings additional expenses in insurance, property taxes, interest and more. These all come out of the net profit. Each day means less profit. The longer a property is held off market or takes to complete, the more buyers investors miss out on. This can be especially damaging when the market experiences unexpected changes like foreclosures or seasonal adjustments. Just a week could make the difference between high demand and drawing multiple, over asking price offers.
Some newer real estate investors also risk running out of money, time to pay back short term debt, or triggering higher borrowing costs. This cannot just dampen net returns, but can also be financially devastating, with long term, very broad consequences.
Finally, recognize that the faster houses are flipped, the more houses that can be flipped each month.
House Flipping Timelines
The investment house flippers make in their upfront real estate education can make all the difference. It is essential for investors to be able to both accurately assess approximate timelines involved in rehabbing and flipping different properties, and be aware of best practices for shortening these time demands. These include:
- Learning how to quickly and effectively evaluate repairs and marketing needs
- Knowing local average days on market, and how their product compares
- Understanding how to plan and schedule the entire process
- Being able to create effective scopes of work
- Superior skill in managing and motivating contractors
So how long should it all take? Why do some real estate investors flip houses in hours, while others seem to take six months or more?
While it may seem shocking to many, some real estate investors appear to take months to fix and flip or rent houses. Perhaps they just aren’t that motivated in some cases. Others may just find they run into endless pitfalls and stalls from having rushed in without picking up a good real estate education course or system first.
While some rehabbing projects might genuinely deserve months of attention, they are the exception rather than the rule. Remember, each day not only means losing money, but also brings risk. Big issues can take time to fix. Roofs, foundations, additions, and pools can all take a long time to address. In some local markets, contractors may even be backed up months or years before they can get to you. It pays to know this before you jump in. There can also be permitting issues.
Real estate investors also need to account for their marketing strategy, and how long it will take to close after finding a buyer. If you find a buyer tomorrow, will it be a cash buyer, or one that needs a loan and could take months to close?
Days and Weeks
Most real estate investors will find that they can accomplish far more than anticipated in far less time if they are armed with the right forms, strategy and get good at coordinating contractors and vendors. New paint, floors, landscaping, and cabinetry can all be done in days and make a massive difference.