Beware the Cold Market Flip

A great way to make money in real estate is to flip homes. At its rudimentary best, this means buying the worst home on the block and renovating it. When the home is resold, the profits should be sizeable if you controlled your renovation costs. It is a time-tested investment strategy, but one that doesn’t work so great in cold real estate markets. You might turn an ugly duckling into a swan, but still get no decent offers. Why? The market may just be stale and going through a period of readjustment. If there are no buyers, there is not business. Since a flip strategy is based on the idea of turning around and selling the home quickly, this presents problems. To avoid this, make sure comparable homes are moving in the neighborhood before investing.

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