Decision : Flip Large Or Small Properties

Flipping is flipping , right? It doesn't actually work out that simple as there are lots of different kinds of flips within the flipping market. Finding the proper niche to fit your personality, ability and risk tolerance is important. Flipping a house that is going to resell for 1.5M is a lot different in execution than flipping a property that is going to resell for 150K. When I bump into people that are first getting into the business and they want to start on a property that requires 100K in renovation work, I admire their intentions, but I usually recommend that they truly think it over. It is much hard to execute on a 6 figure renovation than a simple 25-35K project. There is a lot more time involved in the larger project so carry costs are very significant. There is also that 'amplify' factor which means that any mistake on a larger project is far more impacting than a smaller construction job. Even though the larger profits are tempting to go after, they can easily be chewed up with mistakes. Even experienced investors can make mistakes so when a 30K kitchen is done wrong or needs redone, it can be devastating to a bottom line. The kitchen error on the smaller job would be far easier to recover from financially. You will have to do more small projects to equal a perfectly executed larger project profit margin, but the risk it much lower. I don't want to shy people away from large projects, but taking an honest look at ones own ability and risk tolerance is paramount.

Ian Walsh

215.839.3271

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