When you want to spend a couple of years in one location and make a profit from dipping into real estate, buying a house just to flip it may seem like a really smart choice. Many people buy and flip houses and make enough profit to focus on doing that primarily as their main line of work. Others simply make a little extra cash and like the adventure of flipping homes and "moving on up" after doing so. If you're trying to decide whether or not you want to buy a house just to flip it, consider these pros and cons.
Pro: Experience and Education
Few things will immerse you into a variety of different fields faster than buying a house and renovating it. Even if you have past experience in home repairs and fixer-uppers, this process is a whole different ballgame than ordinary home repairs. You will learn a lot and gain experience in many different areas you never imagined before.
Con: The Possibility of a Loss
Some people buy a home with the intention of buying it and flipping it quickly for a tidy, fast profit. Unfortunately, that's not always possible. If time is of the essence and a non-negotiable part of your situation, you may very well lose money on buying and flipping the house. If you are able to hang on to the home for a longer period of time, you can likely eventually turn a profit.
Pro: The Possibility of a Quick Profit
Although there is the chance that you will lose money on the property when your back is up against the wall, the possibility still exists that you will make a quick profit, which is the dream of everyone who buys and flips homes. It's a major pro and what entices many people to enter the lifestyle.
Con: Tax Increases
Depending on where you live, it may feel like you are being punished for doing something good for the community. Once you have made repairs on a property, your property taxes may actually increase.
Finally, keep in mind that reality TV shows that show how big money can be made from flips are plentiful, but they're not always realistic. You may be better off buying real estate with the intention of investing in it on a long-term basis and renting out the house to tenants. It is very possible to buy a home, renovate it, and then sell it for a higher price than you paid for it, but this process is not without its challenges that should be weighed carefully before a decision is made. If you think buying and flipping is for you, talk to your real estate agent about whether or not there are any promising leads in your area.