Real estate is one of the best ways to make passive income—at least that’s what everyone says; however, a lot of people still have a lot of questions on how to make a good income from investing in real estate and how to protect one’s investments from risks and loss.
Today, we invited Michael Andrew Lauchlan for a sit-and-talk. Michael Andrew remains one of the most successful real estate investors in Los Angeles.
Known for making remarkable profits for house flipping, we decided to ask Andrew some questions about house flipping strategies and how one can make tons of money from house flipping.
Michael, can you tell us a few facts about house flipping?
I have been requested to answer this question many times, and it seems like everywhere you turn, there is always one investor or the other looking to make the next big profit from house flipping. Here are some facts you should know:
- Unlike the buy and hold strategy, house flipping involves buying a property and selling it after making quick capital improvements on the property. The buy low sell high strategy is employed here, but speed is required to make house flipping more profitable.
- Flipped homes accounted for 6.2 percent of all home sales in the U.S. in 2019. The figure shows that house-flipping is at an all-time high, and if you understand the right strategies, you can make a sound profit.
- House flipping is not as glamorous as you think: While most people get their ideas of house flipping from suit-and-tie wearing guys on TV or overly-enthusiastic books, you need sound knowledge on the craft if you ever want to be successful flipping houses.
What are some of the challenges an investor will face when attempting house flipping?
House flipping, just like any business, has its risks. Some of the challenges you will face includes, giving a wrong property-valuation and buying for too high, unexpected renovation costs, unavailability of people or investors who will buy back the house, lack of funding, and more. This is why you must study the market thoroughly before you decide to purchase a property.
Is Real Estate Investment for Everyone?
Yes, anyone and everyone can become a successful real estate investor, but it takes time, effort, consistency, and most importantly, knowledge. In real estate, what you know can be the tipping point to making you hundreds of thousands to millions of dollars every year.
It would help if you did not dive into real estate because some guy on your TV makes it seem like a walk in the park. Do not invest in real estate just because your friends are doing the same or because you have the money. Learn the right strategies from the right people, and always protect your investment.
Can you Give Hot Tips for Beginner Real Estate Investors who Want to Flip their First Property?
Yes. First, study the market assiduously. Do not leave anything to chance. Business is not a game of luck. It involves great planning and good execution.
Have thorough funding. House flipping can only be profitable if the house is quickly and efficiently renovated and resold. The longer the property sits, the more expenses you accrue from mortgage, property taxes, insurance, utilities, and other costs.
The best way to avoid unnecessary cost is to ensure that funds are available to renovate and sell the property swiftly.
Buy prudently: When you buy a property at a ridiculously high price, you will lose even before the business begins. If possible, hire a professional real estate valuator, and remember that you must always negotiate to your advantage.
Do thorough research on the neighbourhood, the state of the building, the reason why the seller wants to dispose of the property and other information. Knowledge will definitely give you an edge in a negotiation.
Skill: Renovations involve specific skills like plumbing, carpentry, and more. If you are skilful, you can cover costs by doing some of the renovations yourself.
Will you advise a Beginner Real Estate Investor to Begin with House Flipping?
Why not? As long the investor has the right knowledge to execute the deal.
Get to know more about Michael Andrew Lauchlan:
Michael Andrew Lauchlan: Success Secrets, Real Estate Perspectives, & More