4_Dangers_In_Flipping_Real_Estate

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					Title:
4 Dangers In Flipping Real Estate


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338


Summary:
If you have recently purchased some real estate for investment purposes, you are in good company. Recent
reports suggest that as many as 25% of these purchases are made by those who plan on using the property
for investment purposes only. If you hope to "flip" the property there are 4 things you must be aware of that
can put a crimp on your profits.



Keywords:
real estate investments, property taxes, renovations, tenants, landlords, flipping, appraisals



Article Body:
If you have recently purchased some real estate for investment purposes, you are in good company. Recent
reports suggest that as many as 25% of these purchases are made by those who plan on using the property
for investment purposes only. If you hope to "flip" the property there are 4 things you must be aware of that
can put a crimp on your profits.


<b>1. Property Taxes.</b> Keep the property for a few years and you may experience a surge in property
taxes especially if your taxes are reevaluated during that time. Some hot real estate markets have seen taxes
nearly double in just 5 or 6 years.


<b>2. Renovation Expenses.</b> You may have purchased a "fixer upper" at a bargain rate. Once your
project is complete will you be able to recover the expenses and make a profit especially if the value of your
renovated property is above those in your neighborhood? In addition, can you withstand a correction in real
estate values?


<b>3. Insurance and Mortgage Costs.</b> You will pay more for homeowners insurance if you do not
occupy the residence and you have tenants. If you are financing the property you know that your mortgage
rate is higher as well.


<b>4. Rental Pressures.</b> A market saturated with rentals will mean that the rents you can charge will be
less than what you had hoped to receive. In some markets you are required to get special licensing in order
to be a landlord. In other markets the legal rights of tenants mean you could have a lengthy and expensive
battle in ridding yourself of a bad tenant. Will the lower income levels coupled with the added expenses drag
your investment down?
Of course, you can limit your risks [and costs] by doing the majority of the upgrades yourself, appealing
excessive property tax increases, and finding for yourself a trusted and dependable tenant. It isn't easy
flipping a home, but with a lot of pluck and determination it can result in strong profits for you.




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