Fixing and flipping houses can be lucrative, but it also requires ample time, energy and financial resources. When you flip a house, you essentially are buying an older house that is outdated and even in poor condition. The house’s sales price is steeply discounted, and this gives you the chance to turn a huge profit by fixing it up and selling it for a much higher price. While this can be a profitable investment, there are other factors to consider before you buy a fixer-upper property. What are the other factors that could impact the profitability of this type of investment?

The Potential for Hidden Expenses
To turn a decent profit on your investment, all expenses must be accounted for upfront. Some homes have hidden damage that can cost thousands of dollars or more to repair. Such repairs often must be made before the house can be sold again. Because you cannot always know about all potential expenses upfront, ensure that your plan has a healthy contingency fund.

The House’s Appeal
The last thing that you want is to have thousands of dollars or more invested in a home and to find out that you cannot sell the house quickly for the amount that you anticipated. When you analyze sales comps initially, focus on the home’s charm, attributes and detriments from a buyer’s perspective. Consider being conservative as you estimate the projected sales price.

Available Tax Incentives
In some areas, tax incentives are available for revitalizing older homes. These incentives can potentially make a fix-and-flip house more profitable. Pay attention to the details of the available incentives so that you qualify for the full amount of benefits available.

At MortgageDepot, we specialize in fix-and-flip mortgages, and we will happily help you to set up financing that supports your investment objectives. To inquire about the loan terms that you qualify for, connect with the MortgageDepot lending team today for assistance.

Contact one of our loan consultants to learn more.

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