Dennis Lynch is a real estate professional and expert who has extensive experience in all aspects related to property investment. He is the founder of the Dennis and Marshall Lynch real estate company, which is located in Rumson, New Jersey. Dennis Lynch and Marshall Lynch are a father-and-son team who have been in the real estate field for more than a decade. Dennis Lynch, with his expert opinions and analysis, has shed light on the pros and cons of flipping a house in 2022.

House Flipping

House flipping is the practice of purchasing a property or a house to resell it for a profit. It can be explained in such a way that a house that needs certain improvements and renovations is available on the market, and a real estate investor buys it intending to resell it after making the necessary amendments and fixes. The house was bought to make a profit rather than live in. This whole process is called "house flipping." Dennis Lynch further divides house flipping into these two categories:
An investor buys a house or property at a location or area where prices are quickly rising. If no upgrades or renovations are required, the investor keeps the home for a few weeks before reselling it at a higher cost to earn a profit. This helps the investor make some quick money through buying and selling.

An investor buys a property or a house that has the potential to increase in value with suitable upgrades and improvements. When all of the work is finished, the restored house or property is put back on the market for resale by the investor at a considerably greater price to earn a higher profit from selling it.
Whereas the thought of fixing or upgrading a house is difficult, the returns are substantial. It simply requires some preparation for any potential problems and adequate cash to invest in real estate.

Additionally, Dennis Lynch recommends that to implement a successful house-flipping business strategy in Rumson, New Jersey, investors must have a basic understanding of renovation and remodeling. Not only that, but real estate investors must understand their market, have an efficient network of skilled workers, and be able to successfully predict renovation costs, among other things.

House flipping seems interesting, but before you start, it is critical to understand the benefits and drawbacks. An important thing to keep in mind is that it is a risky investment, and after COVID-19 when 2022 is on the verge of stability, it requires detailed planning and attention to detail. You put your money, time, and skill at stake with the idea of making a huge profit on it. The benefits may be huge if everything goes as planned, but it can be a terrible failure if things go wrong. Understanding the pros and cons of a real-estate flip will allow you to make a smart investment move in Rumson, New Jersey.

According to Dennis Lynch, here are a few factors to keep in mind while stepping into house flipping in 2022.

Pros

Home flipping can help in making some quick profit

It has been observed by Dennis Lynch that the major reason for people getting into real estate flipping is to make great money in less time. If you have planned things well and worked effectively, a house flip can provide very high profits, more than the average yearly salary in the United States. The interesting part is that these returns may be obtained in a short time, often in a couple of months. For the average house, the profit margin can range from $30,000 to $80,000. A Dennis and Marshall Lynch real estate company has been working in this business for more than 10 years, and according to it, the house-flipping market has its shifts in Rumson, New Jersey. A quick money investment sometimes doesn't work in your favor, so plan carefully.

Flipping can lead to discovering more about construction

Another advantage or benefit of house flipping is that it allows you to learn more about construction. It will enhance your knowledge of fixing, remodeling, and modifying a property. Consequently, you will be able to comprehend the cost of distinct electrical and plumbing fixes. Not only that, this whole experience will make you identify major concerns such as structural difficulties and environmental risks during construction. It will surely help you understand the importance of budgeting for unpredictable expenditures.

As a result of contractor disagreements, delays in construction or material delivery, or if the property does not sell as soon as predicted, you will incur holding expenses. All of this will be learned through first-hand construction experience.

Home flipping will expand your network

One of the benefits is that house renovation and flipping will make you able to deal with multiple professionals. These skilled workers and professionals will help you build up your network which will provide leverage in future projects. The business contacts you will make include agents, lawyers, regulators, contractors, and brokers. The rapport you develop with them will benefit you while you expand your real estate investment business. Dennis Lynch suggests building up a real estate network, as networking is a significant component of real estate and may help you locate some important on-sale bargains that no other investor knows about.

Flipping assists in understanding the buyers' perspective

Once you've completed one profitable house flip, you'll have a better grasp of what homebuyers want and what they find valuable in a new home when searching the market. This understanding of the homebuyer psyche and your experience of dealing with it may be used for future ventures, increasing your earnings as an investor and motivating you forward. House flipping will also expand your exposure to real estate, allowing you to recognize new opportunities or boost your confidence in undertaking more big projects. The significance of understanding what homebuyers want cannot be overstated. What you consider to be the ideal house may not be for potential purchasers, and the decision to buy such property will leave you with no reasonable bids.

Cons

Probability of potential loss in flipping

The risk factor involved in house flipping cannot be eliminated. The chances of potential loss can increase if spending in several areas and the losses can multiply if the project fails. Many reasons can bring a loss in house flipping. Some of the points highlighted by Dennis Lynch are mentioned below.

Tax increase: Another important factor that can lead to a potential loss is a tax increase. After you have finished home upgrades, the government may raise existing real estate taxes. This will affect you if you are unable to sell the property, and you will have to pay all the taxes by yourself. Secondly, it may influence purchasers who may reconsider buying the house due to the increased tax payment. Deniss Lynch recommends avoiding such situations by doing early research into current and upcoming government laws and regulations and then budgeting accordingly.

Unexpected expenses: This category encompasses anything from pending permits to construction delays. It also includes the underestimated number of upgrades and renovations that occur while working on the project. These costs soon build up and can burn any possible gain. It is also uncertain whether you can give a discount to the purchaser as such unexpected expenses might leave you with little profit margin.

The cost of holding a house is a risky

One of the primary risks that need to be considered is the holding cost of the house. The con of holding a house longer directly impacts the amount of profit you can make. The relationship explained by Dennis Lynch is that the longer the time it takes to sell the house, the more profit you may lose. Even after the work of renovation and restoration is completed, there are other expenses on the list, such as taking care of the house, maintaining the lawn, and removing winter debris. When you are the owner, you will have to pay any loans, insurance, or taxes on the house. All of these expenses while holding the house minimize the profit margins for you.

Flipping can be stressful

Real estate flipping has another disadvantage, and that is stress. Mental pressure and stress can impact your health as well. Many things have changed in the real estate investment industry since COVID-19, including increases in labor costs, material charges, taxes, and property prices, among other things. Such unexpected scenarios and situations can bring unwanted stress and pressure on the investor. Some of the notable things highlighted by Dennis and Marshall Lynch's real estate company that can minimize the stress include doing your due diligence before investing in a property; forecasting and budgeting for the renovations; managing labor; hiring reliable contractors and agents, and keeping an eye on project deadlines.

Author's Bio: 

Alex is a professional writer and digital marketing expert.