How Much Risk Is Too Much in House Flipping?

House flipping in any market is an imperfect -- and potentially risky -- business. Once you crack open a house, well, almost anything can happen. Even with an inspection (which you absolutely should have), you can uncover old problems that were never properly repaired, run into cost overruns when material shortages catch you off guard, or even discover that you've got a house you can't make a profit on.

In the real estate industry, we all know everything can be sold -- but "for how much?" is the question. When flipping houses, it's really important to understand the market your house is located in, as well as who future potential buyers will be. Unlike other kinds of assets, a house is something everybody actually needs, but it's far more difficult to liquidate than, say, a stock portfolio. The amount of risk you're willing to take has to be based on the hyperlocal market and slice of time in which your project sits.

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Source Fool.com