Avoiding the Dangers of Flipping Real Estate
October 28, 2009 by Customer Care
Avoiding the Dangers of Flipping Real Estate in Des Moines, by Des Moines Real Estate Experts RE/MAX Real Estate Concepts
You are probably already aware that flipping Des Moines real estate has made many millionaires during the years. It is a lucrative investment that when done correctly can be the foundation of a real estate investment career. There can be some pitfalls, however, and here are a few things that need to be avoided.
#1 Renovation costs
The biggest problem in buying a fixer-upper in Des Moines is making an accurate estimate on the renovation costs. One small mistake in calculations can add up to thousands of dollars being spent. If you are seriously interested in purchasing a fixer-upper as an investment opportunity, you need to get renovation quotes from at least three different contractors in the Des Moines area. A good rule of thumb is to take the highest estimate and add an extra 20% onto it. This will give you a security blanket to work with when you are estimating potential profit.
#2 Taxes
Property taxes rise at different levels. They can rise substantially while you are fixing up your property or holding onto it for a couple of years to gain equity. This needs to be taken into account when you are estimating costs of the Des Moines property.
#3 Rental Saturation
If you’re planning on renting the Des Moines property, either while it is being fixed up or after the renovations have been completed, you will want to know what the rental market looks like in the Des Moines community. If there are too many rental units available, then you may have to lower your rental rates to match the going rate. This is an important fact to consider when you’re looking at flipping real estate.
Most professional Des Moines real estate investors understand that sometimes it takes time to flip a property properly. Sometimes it can be best to sell the property immediately, while at other times holding onto the property will yield the most profit. As you begin playing the game of flipping you will get a feel for what works and what doesn’t. Your real estate agent in Des Moines can also help you look at which possibilities are the most financially beneficial in the long run.
If you need more free information about selling, buying or investing in Des Moines real estate and for everything Des Moines real estate visit us at Real Estate with RE/MAX. Please feel free to contact us with any of your real estate or mortgage related questions and we will be more than glad to answer your questions. Call us at 1-800-708-5890 or email us at dsm@realestateconcepts.net.
Filed under Des Moines Real Estate Blog
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