Investors today have access to any number of methods for investing in real estate, whether it’s renting out a room in their own home, or crowdfunding a commercial real estate development project on a platform like Yieldstreet. One of the most popular strategies over the years, however, has been to acquire a property that needs renovation with the goal of selling later at a higher price, a practice more commonly known as “property flipping.”
But is property flipping, whether with your own capital or through a fix and flip loan, a smart investment in 2022? Let’s take a brief look:
Pros of Flipping Properties in 2022
Potential for High Returns – Due to the various economic impacts of the pandemic, 2021 saw a supercharged seller’s market, meaning homes across the country were being sold almost immediately after being listed, and often above the initial asking price. According to experts polled by CNBC, a continuation of this trend could very well play out in 2022, making property flipping attractive to those seeking out unusually high returns on their investment.
Networking Opportunities – The popularity of property flipping makes it an excellent way to tap into emerging networks of real estate developers and investors. As technology continues to advance in 2022, facilitating the further growth of online investment and social media platforms, now could be the perfect time to get a foot in the door and build rewarding, and potentially lucrative professional relationships.
Gaining Experience – Property flipping is hard work, and while some may view this as a downside, there is an advantage to be found in the accelerated exposure to various facets of the real estate industry. By rising to the challenge, new investors will learn valuable information about local markets, as well as the cost and logistics of renovation and construction, and likely all in a very short period of time.
Cons of Flipping Properties in 2022
Unpredictability – If these past couple of years have taught us anything, it’s to expect the unexpected. Simply because experts predict that the housing market will continue to favor sellers in 2022 doesn’t necessarily make it a guarantee, so those considering flipping properties this year should understand the associated risks.
Tough Learning Curves – Again, while some may thrive under the pressure, property flipping isn’t always the best choice for novice investors. Between navigating unanticipated expenses, reconciling balance sheets related to ongoing renovations, and understanding complex tax requirements, investors should be prepared to dig their heels in and expect to get their hands dirty along the way.
Conclusion
While property flipping in 2022 could be a recipe for high returns and an expedited introduction to real estate investing, lingering uncertainty in the market and the relatively demanding nature of this strategy could be a recipe for stress or unanticipated losses. As a rule, investors should only pursue projects that suit their own risk appetites, and consult with qualified financial advisors before making any final decisions.
Source : https://www.newswire.com/news/is-property-flipping-a-good-investment-option-in-2022-21629466
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