I would love to be able to buy houses, fix them up and resell them. I have seen my parents do this and they always did such a nice job and made a profit as well.

This used to be very lucrative in America. I don't know how profitable it is now, however.

Here in the US it still seems popular in some areas. They even have those shows about flipping houses. Although most of them seem to be a few years old.

I think I will need to research further to see if it is as beneficial as it once was to use this type of investment.

It seems profitable once you manage the project properly...I'm assuming it's still doable now.

I'm not too sure about this idea in this year of 2007...if everything is planned for then you might be able to make some margin of profit.

It's harder now because the cost of buying a new house is much closer than the costs of building a new house. Many of our recent mortgages were people buying a home to tear it down and build their own, maybe leaving the basement or some other historical parts intact.

To do this well I think you would need a lot of expertise in refurbishing homes, or a market where you could buy many historical homes and bring them to a replica state. Start looking for places famous people were born.

There are still plenty of opportunities out there, but there are also many people doing it now days. That means you may have to look a bit harder for the right property.

"Flipping" a home is frowned upon by lenders because they do not get the interest out of the loan they were expecting. Now, many lenders have a penalty for loans payed off sooner than some contractual period, usually 2-3 years. Also you have abuses in FHA and other government loans that are intended to help families have a place to live, not to help an investor make money. This has made financing a project more difficult, and sometimes more costly.

In looking for a home, there are two things investors are looking for, saleability, and cost basis. If you don't have a ready and demanding market, you may never sell the property, or you may sell it for much less than you had anticipated. That is what makes cost basis is so critical.

Cost basis is much more than the price you paid for the house, it also must include the cost of the loan and interest for the time you hold the house, the cost of repairs or additions, the cost of utilities during the construction, the cost of upkeep on the grounds, and the cost of selling the property when you are finished.

A good friend of mine who does this regularly tells me you make your profit on the purchase, not the sale of the house. This means that it is very unlikely to buy an average house, in an average neighborhood, for an average price, spend $30,000 - $40,000 updating the kitchen and bath, or shoreing up the foundation, and expect to sell it for a premium above the other houses in the neighborhood. Those repairs, while possibly necessary, add very little to the homes value, and can waste your entire budget. You are far better off spending those dollars to finish a basement, add a new bathroom, or build a garage onto the house. That is why so many investors are looking for deals on forclosure or distressed properties. If they can convince the bank to sell short, and not have to go through the legal process of forclosure and eviction, making repairs, and paying sales costs, they are better off free of the bad debt.

The main thing i would consider in the current market conditions is how quickly the property will sell once you have completed the project. The approach works well in a sellers market, but in the current buyers market, you want to be careful of not being stuck with a property for too long without it being sold.

it seems profitable for you if you adopt the buying and then selling, it such a nice job and profitable as well.

I'd like to say even in this market this is still possible but you need to pick your situations correctly. We just made money is south florida in two months in this terrible market. Pick and choose wisely.

I think it is definitely possible to make a profit doing this. I did a fix-and-rent a year ago, and after a refinance, I have a nice chunk of equity and am cash flowing. I just purchased a property at auction, and I'll do the same thing with it. Keep in mind that there are a bunch of professionals doing this, so competition is stiff. The key is making your money on the purchase. You need to buy at wholesale prices and sell at retail. If you can't manage to get a property at 20% below retail (e.g. forclosure, auction, distressed seller), then your chances go way down.

KSluis - DueMinder

Hi,
The best thing and the smartest thing is to buy then sell. A smart thing to do is to buy something when the stock market or its price goes falls and then sell it when the stock market or when its prices rises. many people become rich like that.
Thank You and Feel Free to Ask Questions

Because of the market crash and the depressed economy, there's lots of bargains out there, and if yu've got some spare cash then moving into a incomplete house for the purposes of doing it up to sell it is less risky than buying a new place just to flip. If you take your time with the first one and be really hands on you'll learn a lot and the next time you'll be prepared.