Flipping houses may seem like a great idea. Especially so if you have the money to buy a rundown house with little investment. A “handy-man’s special”, if you have the knowledge, tools and materials you may do well. Provided that you are not also investing in a rundown neighborhood. Granted sometimes neighborhoods do improve, that however is not the usual course of events. Also it takes time often many years to see a neighborhood that has deteriorated turn around if ever.
Investing in a questionable neighborhood can lead to a real loss of money. Even if you have purchased a house for only a few thousand dollars. Also something to remember if you are planning to purchase a house to flip as an investment you need to remember the three rules in real-estate investment. “Location, Location, and Location.” Not remembering these three rules will most likely lead to a bad investment. Rarely a good one.
Prime example of a bad investment, a few year ago, one of my unnamed relatives invested in what he thought was a great investment. A home to remodel and flip. Okay, maybe it was located close to a school, and close to several main routes through town. Close and convenient to stores, and travel routes.
Okay, so why was this home a bad investment? Number one was the location. It was located near the road across from a school, but down and embankment. In a hole really. It was also not feasible or safe for anyone to cross the busy road near the home that led to the school. No cross walk and extremely heavy traffic.
Number two reason it was a bad investment, “location”. It was near a busy road. A loud busy road, also across from a high school that is known for having very loud ball games and band practice. Their band practices when in season last several hours into the night. This may seem trifle until you are up late with a baby who can’t sleep due to a marching band practicing. Also the ball games create even more traffic, read that as more noise. Also with increased traffic it also makes it harder to go out if you need to because of traffic.
Number three reason this was a bad investment, “location”. This house was located at the end of a dead-end street in a neighborhood that had deteriorated many years previously. There was also a huge pile of abandoned tires behind the house. Both tires and trash littered the embankment as people had thrown both trash and old tires over the embankment.
Then there was the matter of the house. The house needed a lot of work in order be habitable. Also a couple of trees needed to be removed because they were a hazard, however these trees were in a location that would make removing them difficult and dangerous.
Before investing in a house to remodel to resell, make sure to do your homework, look at the neighborhood. Really look at the house, yard, nearby houses, what’s nearby. A school across a busy highway is not always the opportunity someone may think.
The main reason my relative purchased this house was because it was across from a school, and someone convinced him this was a good purchase. It wasn’t.