The Ins And Outs Of Condo Flipping
Condo flipping is another hot trend in the real estate industry just like flipping residential properties. Flippers here target the condominiums or units in new buildings which they buy, renovate a little and resell quickly for a profit. Condo flipping continues to grow with the promise of huge gains still very achievable. In fact, a study of hot real estate markets conducted by the First American Real Estate Solutions showed that condos accounted for 20 to 30 percent of the sales involved in the yearly rate of return for home flipping projects done from three to six months.
Condo flippers normally target condo buildings that are still being constructed and then buy one or more units at affordable rates. Once completed, they sell the units 10 to 30 percent higher than what they originally paid. But compared to flipping homes, condos pose more risks. For one thing, condominiums are quick to lose value than other residential properties notably during recession due to market speculation. Also, flippers will likely have a hard time selling condos right away in a cooling market and may not gain much profit sufficient to pay transaction costs. There’s a chance, too, that they could lose in the deal. Additionally, real estate developers are now wary of speculators while IRS is imposing stricter rules and charges more taxes especially for condos not held by the owners for more than a year.
These issues should not discourage real estate investors from pursuing condo flipping. It’s important, though, to weigh your options first and determine your ability to hold the unit for several months in case you cannot get a buyer. Be prepared for the worse because it’s not every time that the market is hot.
Always do your homework by assessing your financial resources and consulting the right realtors. Experts also recommend choosing a condo unit that you can have rented easily if the need arises. Determine the current rent rates in your chosen area and the demand for condos by asking around especially from people who have rented condos in the area.
In searching for the right condos, keep it mind that location is vital. The right location along with luxurious features, a new complex and a strong condo association will most likely lead to a successful condo flipping. Location is also critical in getting a higher appreciation value for your condo.
Selecting a good location involves several factors. First, you need to find out the popularity of the area and its surrounding area. Second, check if the amenities available will draw buyers like its proximity to other good locations and if the condo is located in an area fronting a body of water. You have to understand that waterfront condos appreciate faster while end units have more edge over interior units because of the views they offer.
You also have an option to choose between condos in an established area or those being built in a new development but both have their respective benefits. If you want to have a safe investment, then flipping a condo in an established and popular neighborhood is best. However, if you are a risk-taker then investing in a new development foreseen to be a booming location will eventually give you huge earnings.
Want to Learn more about Flipping Houses? Download the Home Flipping Guide