Home improvements continue to be a popular hobby, and some homeowners have turned it into a lucrative business. House ‘flipping’ gained popularity several years ago through a variety of shows on HGTV, which featured young, attractive couples who made buying an older or distressed property, fixing it up, then selling it for a profit look easy. Is it really that simple, and are there still opportunities available in Colorado? Buying and flipping a home presents a huge financial risk. Before investing your time and money, our Colorado real estate attorneys recommend familiarizing yourself on the house flipping market in your area, and finding out exactly what you will need to do to ensure your venture is a success.
Buying and Flipping A House in Colorado
Home flipping became a trending topic several years ago, in the aftermath of the housing crisis. With a glut of distressed and abandoned properties available, the time was right for savvy investors to come in and buy these homes at pennies on the dollar, fix them up, and then sell them at a decent profit. While the upturn in the real estate market and the steady increase in housing prices is a good thing for most homeowners, it is not so good for those who are currently in or those considering venturing into the house flipping business. According to a February 2016 Denver Post article on house flipping, there are several factors which make Denver and the surrounding areas a less than ideal environment for this type of business venture. These include the following:
- A general lack of distressed properties;
- Escalating overall home prices;
- More expensive housing price tiers, which means reselling takes longer and is more difficult;
- Slower home price appreciation rates, meaning that homes may not increase in value as quickly as they do in some other areas.
In addition to the above, the Denver Post cites studies in which Denver ranks low compared to other metro areas in terms of house flipping profitability, while having one of the highest declines in the overall number of homes being successfully flipped and sold.
Tips on Flipping A Home
As long as you do not mind spending a little more on a home or letting it sit on the market a little longer before it sells, home flipping can still be a way to turn a handsome profit. The key is knowing the right property to buy, and the right improvements to make. Money Crashers offers these tips on how to make the most profit when flipping a home:
- Make sure the home is in a great location;
- Make sure the property you buy is sound structurally;
- Avoid homes that need problematic fixes, such as mold, leaky ceilings, or wiring issues;
- Pick a property close to where you live to save travel time;
- Pick a home priced significantly below current market value.
In addition, you will want to have an excellent credit rating for any lines of credit you may need to open, as well as enough cash on hand for a down payment to avoid having to pay mortgage insurance on the house you are flipping.
We Can Assist You Today
If you are considering buying a home or investing in property, contact our Colorado real estate attorneys today. At Robinson & Henry, P.C., we provide the professional legal representation you need to ensure your rights and interests are protected. We proudly serve clients in Denver, Castle Rock, and Colorado Springs. Call or contact our office online today to discuss your particular case and the options available with one of our experienced attorneys.