Why is gaining insight on real estate investment important for beginners?

TV shows like Flipping Out and Masters of Flip make real estate flipping seem easy and fun. Most reality TV shows revolving around real estate rarely show the risks and monetary pressure these investors have to bear while flipping.  However, flipping is more than finding a house, making a few changes, and putting it back on the market for a profit.

real estate flipping

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Learning about the 70% rule

The first rule every investor should stick to is the 70% rule. It states that investors should always look to pay lesser than 70% of the after-repair value (ARV) of a property minus the repair cost. The ARV is the net value of the property after all repairs are complete.

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What are the benefits of real estate flipping?

If you stick to the simple 70% rule of investment during flipping, you can enjoy the benefits that come with the profession. Real estate flipping is not rocket science, but getting a crash-course on the basics of investment and decision making can help you move towards ultimate success. If you are interested in investing in real estate, check out Phill Grove real estate training for a general idea of what to expect from professional training courses.

Here are the significant benefits of successful real estate flipping projects –

1. You stand the chance of making impressive profits

The most obvious advantage of choosing to flip homes is the chance of making huge profits from investing in an old property, making minor to significant changes, and selling it off to an interested buyer.

Several individuals, as well as real estate companies, do this full-time, and it offers lucrative profits for such short-term investments.

2. Gain buyer insight

Once you put a flipped property up for sale, you will gain valuable buyer insight. You can always use this to your advantage if you have an open house coming up. Flipping houses as a side-act can help you hone your skills as a real estate agent in the current market.

Flipping houses will increase your knowledge of the real estate market in general. You will also come in touch with local investors, insurance brokers, contractors, building inspectors, realtors, and attorneys. These are all valuable contacts you can leverage later.

3. Gain experience

Whether it is selling renewed property, or coordinating with large teams; flipping houses has myriads of experiences in store for you. You will have to encounter unexpected challenges, budget costs, and overheads during repairs, communicate with other professionals during delays, and meet several deadlines during the project.

All these experiences will add to your resume as a real estate agent and a potential investor.

Investing in real estate is indeed profitable. It might even be more productive than buying and holding. Since real estate is more predictable and less vulnerable than the share market, several US citizens are now leaning towards investing in properties rather than buying shares and stocks.

Once you find the right guidance and mentorship, you should be able to make profitable real estate investment decisions that lead you to the benefits we have mentioned above.



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver