You buy a house for $365,000. The interior reeks from top to bottom. It is infested with rodents. The whole place in a state of disrepair.
So how is it possible to sell it a few months later for a nearly $100,000 profit?
This is the economics of house-flipping, the tantalizing, get-rich-quick strategy that lures so many into real estate.
The house mentioned was the project of Paul Myers and Tanice Myers, who have flipped 500 single-family homes in Washington, Idaho and Indiana. With that seemingly hopeless house, they sunk about $135,000 and eight weeks into cleaning and renovation. The couple ended up selling it for $599,000.
For every success story, though, there are plenty of those with not-so-happy endings. Yes, you can make a killing. But also, lots could go wrong: Repairs can take longer than you predicted. The house has bigger, hidden problems that you missed. You misjudged the market, or it simply turned sour while you were renovating.
We’re in one of those tricky times now.
