This article will explore some pros and cons of investing in fix and flip real estate this year.
The good side of Fixing and Flipping Properties in 2021
Here are a few reasons why investing in fix and flip homes is best in the year 2021.
Increased Demand for Real Estate
In the year 2020, the Federal Reserve announced to lower the interest rates close to zero due to the COVID-19 pandemic. And trust us, these are pretty low interest rates that you may not ever see again in your lifetime. And for people dreaming of owning a house – there can’t be a better time.
You must be wondering why it is the best time to invest in a fix and flip real estate. The reason is that the lowered interest rates will save you thousands of dollars over the span of 10-20-year mortgage.
Moreover, the Federal Reserve is not in the mood to elevate the interest rate, which means investing in fix and flip properties in 2021 is the best opportunity you have along your way.
Chance of Making More Money per Sale
The COVID pandemic has brought the most ideal scenario for people who make money by fixing and flipping homes. There’s an increased demand for real estate, low-interest rates, and people willing to buy are outnumbering those selling. You can make more money in a sale in this scenario than you would have made in the previous one or two years.
Problems With Fix and Flip Properties in 2021
Real estate is a good investment most of the time, but it still doesn’t promise to give you ROI. This can be especially the case if you’re not a long-term investor because to make money by flipping homes, you must know what you should buy and when and how to buy. Here are a few issues that can hurt your profit this year if you’re not cautious enough.
You May End Up Paying More per House
Finding a low-cost house to fix and flip sounds good but what in actuality will make you money is how capable you are of selling it. The con of elevated demand is that you’ll use more of your cash to buy a property compared to normal circumstances, which can ultimately impact your cash flow.
Many Things Are Dependent On Your Local Market
Although 2020 was awesome for the real estate market, you can’t see the full picture just by knowing there’s an increase in the sale prices. From March-June of 2020, there were very low sales in the real estate market compared to these months in the previous year.
You can easily find yourself in a situation where the sales prices are high, but it may take a bit longer to sell the property.
If you’re looking for fix and flip loans, contact no other than Red Door Funding. Get in touch with our experts at 832-539-1099.