The real estate market is always subject to change.  Sometimes the changes or corrections take a long time; sometimes the market changes faster than anticipated.  One of the major risks of flipping is buying property and not being able to sell it quickly at a profit that exceeds the costs of the purchase and repairs.  Every month the property does not sell impacts your profit margin.

Many successfully flipped properties are purchased at a bargain because repairs and cosmetic fix-ups are needed.  Sometimes a quick coat of paint on the outside increases the resale value.  Easy, right? However, if serious structural defects are missed when buying the property and surface during the renovation, profit evaporates.  On the same note, investors must weigh the cost saving versus time spent on DIY repairs over hiring a contractor to fix the property for resale.

Like any other investment, real estate flipping has tax and legal implications.  In most cases when property is bought and re-sold within 12 months, profits are taxed as ordinary income.  If you are in a high tax bracket, taxes could take quite a chunk out of your profits.  You should have a real estate broker, attorney, and tax consultant in your corner to be sure you can maximize the rewards and minimize the risks of flipping.

Never forget that the temptations of quick profit sometimes blind investors to the drawbacks and risks associated with flipping.

 

Contact Infinity Realty Guam today for the real estate company that will provide quality service you deserve.  (Click here).

DISCLAIMER: This information is provided for general awareness only and is not intended for the purpose of providing legal, accounting, tax advice or consulting of any kind.  Please consult with a professional in their respective expertise for complete details.