If you be aware of real estate and the cycle of markets you will know this is outstanding news (believe it or not) when it comes to getting great bargains at a lower price, but it also makes it difficult to convince buyers to pay top dollar when there are better bargains down the road. This of course is one of the risks when flipping properties. The tremendous profits that most investors seek cannot be accomplished if the property cannot be purchased, rehabbed, and sold soon.
Unfortunately, in a "buyer's market", very few properties are selling too quickly. The most severe case scenario is when an investor cannot sell their flip rapid enough and they are forced to either absorb the loss or rent the property out which will in most cases negate all the efforts that were made to rehab the property. This scenario is the worst problem of every real estate investor who engages in flipping properties. What I found to be the best solution is to drop the price and take a loss than hold out for a better price risking further shortfalls.
Of course this is not the only risk associated with flipping real estate. Another risk is when one seriously undervalue the amount of income that will be required in order to get the property up to standards. This is something that many first timers find. A lot of new flippers without awareness of home repairs tend to have unrealistic requirements of exactly what those costs are and grossly under estimate them.
Another risk that isn't often considered is the risk of overestimating your own capacities. This is one risk that costs not only precious time but valuable money as well. I remember working on my first furnace, (in the winter) I thought I knew what I was doing and when I got in to this project I quickly learned I didn't know what I was doing. Well that night we added extra blankets to stay warm and then called an experienced furnace repair man the next day. Today with my experience I know what I can do and what I can't do. Then I get a quote so I know exactly what my costs will be and I can see my true costs on the rehab project. Real estate investing can't be a guessing game.
The final risk is often something that simply cannot be seen or expected. I call them either acts of God, like floods, or acts of life, like melt down of the banking system. These acts can happen any day at any time. In these instances, it can take quite a while to recover from the tragedies and 'flippers' among other investors are often left feeling just as lost and devastated as those that were victimized by unanticipated problems.
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For more info about real estate investments and investment plans , visit http://www.collectrealassets.com
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