House Flipping – Business Dynamics

Minimum Bottom Line Profit Should Average 9.4%!
For Trades & Subcontractors, at Least 11%
After Income Taxes Are Paid!

There is a lot of misinformation about flipping real estate on the internet and on television. I’m mostly shocked by the lack of detailed information related to the entire cost of the project and the adjusted sales price. I have yet to read a single article that goes into the details of the business dynamics of flipping houses. Well, this article is going to explain this business model from a different perspective. 

Almost every house flipper out there will tell you that they are in the business of real estate. I disagree. You are actually in the business of construction. How can I say this? Well let’s compare the two industries. In real estate, you are either involved in the selling of someone else’s land or you are a landlord. If you are acting as an agent for someone – YOU DO NOT OWN THE PROPERTY. You are merely acting on behalf of the owner. As a landlord, you do own the property. But, your financial position is to hold the property for an extended period of time and receive rents for use of the property.

In new home construction, a contractor takes on a project with the goal of turning materials and labor into a home that is sold to a customer. There are generally

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