Buying and selling real estate can be a profitable endeavor. But How can you achieve this?
This guide is intended to provide information to those who are interested in investing in real estate through flipping houses.
It is more than just a how-to manual.
The purpose of this guide is to explain the benefits, caveats, and even alternative options to house flipping.
If you are interested in starting a career in real estate but do not wish to start from scratch, this guide may be of interest to you.
In addition, it would be a great investment for anyone who simply wishes to make more money and is willing to invest in real estate.
The term may have been heard on television (there are many popular house flipping television shows these days), but you may not be aware of its exact meaning. House flipping is basically just buying a house for a very low price (foreclosure, bad condition, etc.) and then selling it for a much higher price than what you paid for it. Check 6 Risks to Be Aware Of When You Come To Flip Houses
The concept sounds simple, and to some extent it is, however, it is real estate and any investment in real estate carries certain risks. In order to make an informed decision, it is essential to weigh the risks and benefits and gain a thorough understanding of what you are getting into.
It is important to take a moment to review the history of real estate and the origins of house flipping before exploring the tactics and paradigms of real estate and house flipping.
Over the course of fifteen thousand years, our ancestors gradually abandoned the hunter-gatherer lifestyle. Home ownership and real estate were heralded by the transition, which affected certain regions more than others.
At first, fighting or fleeing was the only option; land was defended by those who could defend it. In the end, we established a system of tribal leaders, with those who had tribal approval handling all land disputes.
There was a shift from more and more powerful tribal leaders to a pooling of labor and a CEO to direct efforts. As a result, hunter-gatherer families that could only support a few laborers evolved into agricultural communities capable of supporting many.
In order to gain safety in numbers, more people were forced to sacrifice familiarity and family values than ever before. Any unruly raiders were easily repelled by an army.
People paid homage to the lord or monarch who claimed ownership of the land as a form of security. Basically, it was the first system of renting.
As these farming villages became cities, the leading families maintained their ownership by right of lineage; their ancestors were the strongest and could defend their competitors better than anyone. They became kings, pharaohs, emperors, and heads of other feudal dynasties.
In most countries, this system has been divided into two distinct systems: taxes and tenancy. The wealth of royal families is distributed among their friends.
Their titles and deeds to their lands were signed away. Consequently, they were able to collect income from the peasants living there. In addition to this rent, all residents within a ruler's domain were required to pay a tax.
The ruling leader made a number of other demands, including military service. Since some rulers held land by military right and not by birthright, these requirements were a bane for many.
It was possible for rulers to be overthrown by other rulers, or by whoever was strong enough, but the peasants hardly noticed or cared about the differences.
Trade was one of the ways in which this benefitted the peasants. As a result of trade with other kingdoms, their level of wealth increased.
This led to the development of the merchant class and specialized laborers, commonly known as tradesmen, who were able to earn a living through their skills instead of their crops.
Due to this, nonagrarian establishments and homes were built that paid taxes and rent to the lords and rulers, but were owned by the common people and not only by royals. First landlords of common blood (no birthright) were merchants who made the most money. Although they did not own the land, they owned the houses on it.
In the history of mankind, the industrial revolution was one of the great equalizers. Generally speaking, the effects of industry were neutral, but how they affected individuals depended on their application.
By using machines to perform manual labor, many peasants were able to devote more time to other activities. As a result, some people were able to pursue further education and training in new, specialized fields of labor that had been created by the industrial revolution. The skills of many hand-crafters have become more or less obsolete over the years, which were once revered.
Aspiring individuals were able to overcome class barriers and ascend, bringing much of their lower-class ideology with them. Consequently, it was possible to track housing for laborers and products marketed to lower-class citizens. Houses, cars, and other status-worthy appliances were owned by them.
There is no particular place where mortgages were invented. They existed for a long time as an exclusive loan available only to nobility. As a result of the industrial revolution, the world's overall wealth increased to the point that banks were able to open up to individuals who had previously been considered high risk.
This allowed individuals to own homes and even rent or sell those homes for themselves. Over the course of many thousands of years, our real estate strategies have slowly evolved to allow just about anyone to own a home.
In this day and age, owning land is considered to be the foundation of all investment opportunities. A lack of a stable population and a fixed location restricts trade and commerce between groups.
In the twenty-first century, ownership has evolved into something that can be bought, traded, and sold, just like any other commodity. The ability to own a home has changed the way people all over the world live forever.
In spite of the fact that "flipping houses" is a relatively new term, the practice of purchasing and reselling houses has been around for quite some time, whether as an investment or a way to get rich quick. The use of real estate as an investment tool has been around for hundreds of years, perhaps even longer. The ownership of property was regarded as a symbol of wealth even in sixteenth-century England. Rich and well-to-do individuals used property ownership as a means of protecting their assets prior to the introduction of property taxes.
In the late twentieth and early twenty-first centuries, investing in real estate was seen as a means of generating income during periods of low interest rates. Many of these investments were previously held by tycoons such as Donald Trump. In order to invest in commercial projects, he could accumulate large sums of money. It is not uncommon for smaller-scale investments to be made today without the involvement of media moguls and millionaires.
House flipping as we know it today was largely influenced by the enactment of the Federal Real Estate Investment Trust (REIT) legislation in 1960. The act made it easier for investors to pool resources for major projects in real estate, primarily commercial ones. Over the years, the legislation has been modified and has resulted in a much more advanced and expanded real estate industry. Any industry that expands is continually seeking new markets. As a result, today there is a much larger pool of talent available for those interested in investing in real estate.
The disastrous economic recession of the 1980’s was another factor that contributed to the development of the house flipping trend. This had the extra effect of discouraging stock market earnings and increasing the number offoreclosures. Almost everyone has seen commercials and late-night infomercials about how to buy houses "with no money down" and make money fast. Sellers of these package plans promised big profits with little risk by buying and selling houses.
Another factor driving the popularity of house flipping is the trend of renovating old houses. Television programs such as "This Old House"(from 1979) have given rise to dozens of similar shows on cable television today, like “Flip This House.” This, combined with the transformation of hardware stores into home improvement centers, has put the information and expertise into the hands of almost anyone, not just contractors and carpenters.
These days, it’s not uncommon for people to make their living by buying a house in very poor condition (known as a "fixer upper") and living there for a few months while they renovate the property. They then sell it for a nice profit and using the money to buy another house (and thus the cycle continues).
