Think This Real Estate Investing Play Makes You Money? You're Dead Wrong
House flipping is all the rage. Any time real estate prices start going haywire, an army of flippers takes advantage by buying old houses, fixing them up a little, and then reaping a nice short-term profit when they sell them.
The economics are good when prices keep going up. If you put 10% down on a $350,000 house, invest another $50,000 fixing it up, and then sell it for $450,000, you have $50,000 of profit on an $85,000 investment. That's good for a 59% return. Funnel that profit into even more houses, and it starts pyramiding into a little fortune.
The problem is when prices stop going up. Let's go over a few reasons why house flipping in the real world isn't as a great an investment as HGTV may make you think.
Source Fool.com
