There's more to house flipping that meets the eye. And for professional home flippers, delays in project timelines, finding the right partners, and most importantly, funding, are just some of the business challenges, according to a survey by Porch.
The survey of 370 people who have flipped residential real estate in the last five years looked at aspects such as buying a home, renovating on a budget, and quickly selling it for a profit.
When it came to funding for a home flip, 41.6 percent respondents said that they tool the capital from personal savings accumulated from their primary source of income. Around 30 percent took bank loans, while 6.2 percent said they borrowed money from a family or friend.
In terms of capital needed for a median flip vis-a-vis the profit on it, the survey revealed that profits weren't rising with the trend. In fact, the median flipper "needed $50,000 for their most recent flip, because the average purchase cost was $100,000." It found that while renovations were the cheapest part of the project ($30,000 or less), respondents said that "underestimating the cost of renovating could be the difference between a large profit and losing money."
In fact, nearly 64 percent of respondents said that they underestimated the cost of their last project while 36 percent said they didn't budget enough money.
Project partners also played an important role with 87 percent of the respondents saying that they flipped houses with a partner. Of these, 45.9 percent partnered with their significant other for these renovations. As with most big projects, major disagreements happening over budgeting (55.9 percent) and timelines (46 percent). However 43.5 percent respondents said that they rarely disagreed with their partners.
Speaking of timelines, the survey found that on an average the total time to flip a house was delayed 17 days from the original timeline. And as with large projects like house flipping, project management was the most stressful part about the business. Around 90 percent of the respondents reported this factor as their key area causing stress, followed by construction (85 percent).
Click here to read the full survey.