Susan Ormont - RISK VERSUS REWARD: A SIMPLE GUIDE FOR INVESTING IN REAL ESTATE

CHAPTER 10 Protect Yourself from Flops

You’ve likely heard of HGTV’s show, “Flip or Flop.” Obviously, the goal is to successfully flip properties (make a good profit). But the reality is that sometimes flips do turn out to be flops (no money made, or maybe even money lost). The good news is that there are things you can do to lessen the likelihood of a flop.

Pay attention to the market.

Be aware of the average number of days properties sit on the market in the location you’re flipping. You should also look for trends over longer periods of time (year-over-year). I suggest checking once a month, if not more frequently. Be thorough by getting your research from both local and national resources. Of course, the market can and does change, and isn’t entirely predictable, but by paying close attention, you’ll be better able to act and react accordingly.

Know your neighborhood.

What are the overall trends in your area? Is the population steady, increasing, or decreasing? Check out census.gov to find out. This is important, because you’ll be able to charge more if the area’s growing, but you might have problems if it’s declining.

Read the bank’s fine print.

Interest rates change all the time. If they go up, some buyers might not be able to afford loans; if they go down, your buyer pool may

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