During the housing bubble, several Nashville entrepreneurs found their way to making money through flipping houses. Essentially, at that time the Nashville real estate market was so good for sellers that most listings sold quickly and for higher than normal prices. This meant many flippers made quick profits for little risk. Flash forward to post-market fallout and those same flippers were now stuck with multiple real estate listings that they could not unload.
So, how do things look for flipping houses in Nashville’s current real estate market? When the market started to slide downward flippers began looking for other, less risky jobs. As the Nashville market has slowly stabilized and started growing again, some investors are looking at flipping houses as a viable opportunity. Certainly, the rules have changed for flippers, but it can still turn a profit.
Here are the pros and cons of flipping real estate in Nashville:
Pros of Flipping Real Estate
- Profit – Obviously, the main reason people flip houses is to make a profit. How much profit depends on a number of factors. Typically, the more distressed the property the better deal is on buying it. For those with DIY skills or trusted contractors, making upgrades and improving the condition of the property could yield high profits when it sells.
- Time – Technically, a “flip” is when the same property is bought and sold in its improved condition within a 6 month period. Though 6 months may sound like a long time for home improvements, it’s a very short time if one makes a hefty profit.
- Experience – There are no requirements for previous experience to flip a house and there may be no better opportunity to learn the ins and outs of real estate markets, home improvements, and financing than through flipping houses. At the end of the process, even if your wallet didn’t grow, your knowledge is guaranteed to increase.
Cons of Flipping Real Estate
- Risk – There are numerous risks involved with flipping a house. Improving a real estate property might sound easy, but you risk uncovering one expensive project after another once you get started. There is also market risk – just because the real estate market in one area has been performing well does not mean your flip will sell as quickly or for as much as you hope.
- Taxes – There are tax consequences with flipping real estate so do get familiar with them first. For some guidance, start here.
- Stress – With high risk and the potential for high payoff comes high stress. Anything can happen with a real estate flip and if don’t have a partner, it all falls on your shoulders to figure out the plans.