Nearly everyone has heard of someone who has bought a Jersey Shore real estate fixer-upper or near-foreclosure house, renovated it, and then sold it at a hefty profit. Sound fairly simple and lucrative? Perhaps, but a word of caution: Don’t quit your day job just yet!
Those who earn an income, either part-time or full-time, by flipping Jersey Shore real estate, caution would-be flippers to understand the basics before beginning such a venture, they definitely need to:
- Assess their financial situation
- Have time available to renovate the property
- Possess good negotiation skills
- Have knowledge of what renovation entails and of building codes
- Have a practiced eye for evaluating potential value
- Do a great deal of research to learn about the industry
- Have a good sense of timing
- Find trustworthy advisors, such as an agent, a loan officer, and a reliable subcontractor
Of primary importance is that you have adequate cash available for escrow and loan fees, renovation supplies, subcontractor fees, monthly mortgage payments, insurance, and utility bills. Richard Davis, owner of Trademark Properties and creator of the reality show “Flip This House”, states that he has never seen anyone actually buy a house for no money down. It is also important to note that the FHA requires flippers to hold on to their Jersey Shore real estate for at least three months in order to qualify for FHA mortgage insurance. Remember that every day you own the property it costs you money.
Those owners of Jersey Shore real estate who wish to flip, far too often have no idea of the actual physical labor and time involved in replacing floors and roofs, installing plumbing, extensive painting, remodeling a kitchen or bathroom, or making major improvements to landscaping. While an owner can hire a subcontractor to do some of the work, that costs money and reduces the amount of the final profit.
Finding The Property
Finding the right property is no easy task, either. Just because it is being foreclosed does not make it a steal, and even with a home inspection, problems may not show up until renovation has begun. A potential investor must also beware of being too optimistic about renovation costs or profits.
Time, too, is often of the essence. Once the investor finds a suitable piece of Jersey Shore real estate, he must move quickly to obtain a loan, order supplies, hire contractors, complete the renovation, advertise, and sell the house.
So, should someone give up the dream of flipping real estate? Not necessarily, say many experts. They do, however, advise investment property buyers to keep their steady job, with a guaranteed income and health insurance, while they experiment with flipping two or three houses a year. With adequate preparation and a little luck, full-time flipping may just be a possibility for the future!