The concept about flipping a Lancaster house is uncomplicated: purchase a run-down house, do a little remodeling, and then sell it for a higher price. There is no doubt that house flipping has delivered large returns to many investors all over the country. But flipping houses also causes an elevated deal of risk, and a flipping project can at once spiral out of control and turn into a financial nightmare.
House flipper Carol Sankar of Charlotte, NC illustrates how in one project the home was burglarized multiple times during the remodel. One day near the culmination of the project, she arrived at the home only to find out that the kitchen cabinets had been stolen right off the walls. The dishwasher and refrigerator were all gone too. Because the property was in a neighborhood with few security measures and a low police presence, there was little Sankar could do to regain her stolen materials and appliances.
In another example, Daniil Kleyman in Richmond, VA, purchased a project house for what he thought was a great deal. An experienced investor, he made a preliminary market assessment of the property and foresaw that he’d be able to remodel and sell it for five times his cost. Sadly, Kleyman made a multiple bad decisions that led to him losing money on the flip.
Not only did the first contractor he hired quit the job, runs off with his money and didn’t finish the job he was contracted to carry out, but Kleyman had also used the wrong comparable properties when estimating his post-remodel sales price. He had to list the property for far less than he had initially wanted. And then the property was burglarized, stripped to the walls, plumbing broken and flooding the basement. After fixing the damage and replacing the stolen appliances and fixtures, Kleyman was finally able to sell the house at a loss to a less-than-happy client.
Kleyman’s story, to be specific, is one that showcases many of the hurdles that come with flipping houses for resale. This investor would have succeeded from accurate market data, proven construction professionals, and the expertise of property management professionals from the start. Think about how this ordeal might have been different had he invested in the property as a rental home instead.
By first consulting an industry expert like Real Property Management Traditions, he would have secured a detailed market assessment prior to purchasing the property. He would have known the market value of the property from the very start, conceivably altering some of the choices he made later on.
RPM Traditions would have also equipped Kleyman with the names of trusted remodeling and repair vendors in his field and would have checked in with those vendors incessantly, greatly decreasing the chances that the contractor he hired would get his money and run. Finally, the team would have accurately priced and marketed his new property for him, finding quality tenants set to pay a competitive rental rate every month for as long as Kleyman wanted to keep the home.
Even with these clear benefits, some investors feel that working with a property management company is too costly. However, as this example reveals, Real Property Management Traditions offers a range of prized services and business contacts that can help investors make far more money long-term than flipping houses might bring. In fact, we handle all of the operational demands of owning rental properties, leaving you free to work on other aspects of your real estate business.
With Real Property Management on your investment team, you’ll have the help of experts devoted to making every one of your properties one of the best long-term investments you can make. For more information, contact us online or call us at 661-266-1400 today.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.