With all the recent success in the real estate market, one can only imagine where the market will go. I think that the industry may take an interesting turn.
By now every Joe Schmoe knows about the potential of the real estate market. There have been enough television shows, books and stories about flipping houses that the market has become overrun with money hungry people looking to get rich quick. But has anything really changed?
The idea of investing in real estate and properties is nothing new. The potential has always existed, as it always will. The problem is that the actual process of flipping house is much harder than the TV shows let on. Sure, on paper, the concept of purchasing a hidden gem at a great price, slapping on a coat of paint, and reselling for thousands of dollars more sounds great. If only it were that simple.
It’s complicated! The home buying process is a long, complicated, which can fall apart due to numerous factors. Think about it, most people buy one house during their lifetime and spend the next 30 years paying it off. That means the majority of people aren’t versed in housing contracts, mortgages, broker fees, etc. You really need to know what you are doing. If you misread a contract or don’t fully understand the fine print, you could end up dishing out thousands of dollars!
It takes a lot of time! Most people don’t have the luxury of starting off with a lot of investment capital. Most people work full time jobs just to pay for daily expenses. That means they must hunt for houses on breaks, after work and on weekends to find a good deal. Once you find that good deal you need to be able to act quickly. Some houses only stay on the market for a day. Heck, some houses don’t even make it to the market because realtors give their friends first dibs. Then if you’re luckily enough to find a good deal, you’re going to have to contact contractors, realtors, insurance companies, and all the necessary businesses.
It’s expensive! So you think you can understand the process and you have the time, but do you have the money? For a lot of mortgages you need proof of income or proof that you will be able to pay back the bank. If you want to buy at $200,000 home, you will need $20,000 for the down payment. If you can scrounge that much together, you also need money for renovations and money to pay off the mortgage until the house is resold. One more thing – you need credit. So if you happen to come into some money, you still need to have good credit in order to get the loan.
If you’re still interested then go for it. I image this industry can only exist for so long before the payoff isn’t worth it. In addition, there is one key aspect that makes this job so risky – the market. You can’t control the market. You can’t control when and how many homeowners will be selling their houses. What if there is a natural disaster? I live in San Diego and I’m sure the recent wildfires have affected the value of many properties. The houses will probably rise up again, but in the meantime people don’t want to feel like they are in danger.
So where will the market go? Who knows? Maybe people will start flipping trailers.