Ways to invest in real estate. Flipping

Investments in real estate are one of the most stable and profitable ways of investing capital. Classic ways of investing in real estate are represented by three options.
We'll tell you about each one separately.

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Flipping, or investing in real estate for a short time, has become a popular investment option in modern conditions when renting out has become less profitable. This method got its name because of the English verb “to flip” - “to turn over”. An investor finds a property that needs renovation but has the potential to sell at a profit, and after renovation, resells it at a higher price. Flipping is the purchase of real estate at a discount, renovation and subsequent sale. This is one of the few strategies that allows you to make money on the secondary housing market.

The flipping process consists of several stages. First, you need to analyze the real estate market to understand how prices and demand are changing. Next, the investor studies advertisements for sale, selects a suitable property, buys it and draws up an estimate for repairs. Then a repair team is selected, construction materials are purchased and work is monitored. After the renovation is completed, the apartment is photographed and an advertisement is created to find a buyer. Finally, the sale deal is concluded.

An example of flipping is the following situation. An investor purchased a two-room apartment with an area of 42 square meters near the Dynamo metro station for 9 million rubles. Next, repairs were carried out in the amount of 1.15 million rubles, and utilities, legal services and sales expenses in the amount of 75 thousand rubles were also paid. A total of 10.235 million rubles were invested in this apartment. The apartment was sold for 13 million rubles, while the tax amounted to 460 thousand rubles. Thus, the investor earned 2.350 million rubles from this property. It is important to note that the cycle from purchase to sale took only 3 months. This means that the profit was about 80% per annum.

Another example of flipping - with a budget of up to 15 million rubles, a secondary apartment in Moscow can bring in up to 2 million rubles in profit. In current conditions, the target return on flipping is 50% per annum on invested funds.
What risks should a flipper take into account?
However, there are also risks to consider when flipping. Legal risks are associated with the fact that real estate may be mortgaged, under arrest or part of an inheritance, which can delay the purchase process or complicate it. Technical risks can surface when there are hidden problems in the property that were not discovered during the pre-purchase inspection. Financial risks are associated with the need to quickly sell an apartment after renovation in order to return the invested funds and make a profit.

Главное преимущество флиппинга заключается в том, что инвестор получает прибыль за счет разницы между стоимостью при покупке и перепродаже недвижимости. Флипперы обычно вкладывают собственные деньги, чтобы иметь возможность быстро принимать решения. Они также разбираются в тенденциях рынка и располагают контактами надежной ремонтной бригады. Важно учесть все возможные расходы, включая не только ремонт и покупку материалов, но и непредвиденные затраты, такие как замена труб или пола, а также налоги и юридическое сопровождение. Флипперы стремятся продать объекты в течение 3-5 месяцев после покупки, чтобы средства не задерживались в одном проекте.

Флиппинг позволяет получать значительную прибыль в короткие сроки, но также связан с определенными рисками