What are the Risks of Starting a Home Flipping Business?
Unlike Home Flipping, N-Hance Wood Refinishing Franchise is a Business You Can Grow Year Round
Home flipping is not a sure thing: it’s capital intensive, and for many, it’s one project at a time. When you’re in a business that’s only making money when a home sells, it’s easy to become cash strapped pretty quickly.
While home flippers get into the business because it can be a creative, exciting and fun way to earn a generous living, the challenges become apparent almost immediately, as homes cost a lot to maintain, let alone fix up to the point of making a substantial profit. Of course, there’s unexpected repairs, as well as fixed costs such as mortgage, electric & water payments, as well as HOA fees, all of which make owning a property with the goal of fixing it up an expensive risk.
According to CBS NEWS, these challenges are far more common than any in the home flipping space may even realize:
“Today, a would-be house flipper could buy the $300,000…assuming she has excellent credit, CBS NEWS reports. “After five years, the lucky debtor will have paid $45,000 in interest payments alone, and—under the 30% rule—about $20,000 in taxes and other costs. If she sells the house for $400,000, after accounting for the agents’ fees and interest, taxes and maintenance she’s paid out along the way, she would have made a profit of $22,000.”
Considering that this is meant to be a revenue stream, $22,000 is the equivalent of getting a full-time job at minimum wage in many states.
Being tied to the ebbs and flows of the housing market presents an uncertain future and uncertain income
In a new article published by Housing Wire, entitled, “House Flipping is Back – It’s Just Not as Profitable as it Used to Be,” speaks to the crux of why home flipping is such a risk. While home flipping is on the rise, Housing Wire reports that “it appears flippers are making less – way less – than they used to.”
This has to do with the fact that flipping houses is dependant on the housing market. While the economy is good now, the abundance of housing stock and new construction is driving down prices – and profits – for home flippers.
“With interest rates dropping and home price increases starting to ease, investors may be getting out while the getting is good, before the market softens further,” said Todd Teta, ATTOM’s chief product officer, in the article. “While the home flipping rate is increasing, gross profits and ROI are starting to weaken and the number of investors that are flipping is down 11% from last year. Therefore, if investors are seeing profit margins drop, they may be acting now and selling before the price increases drop even more.”
N-Hance is a far more stable investment than a home flipping business
If you’re in the home flipping business, you know how important it is to have a stable revenue stream that won’t dry out while you’re waiting for a house to sell, or are simply needing to raise the capital to begin your next project.
This is where N-Hance comes in. As the nation’s fastest-growing wood refinishing franchise, N-Hance excels at delivering solutions for kitchen cabinets, hardwood floors and more, for a fraction of the cost. Our menu of services helps franchise owners benefit from higher-than-average tickets, and because our process is so fast, owners can complete more jobs than other home remodeling brands. As a result, our franchise owners experience tremendous profit-potential. According to our most recent Franchise Disclosure Document, our top-performing franchise owners generate more than $650,000 annually.
“In the past four years, we’ve more than doubled the size of our franchise network, and we’ve more than established ourselves as the industry leader in wood refinishing services,” says Kelly Jensen, President of N-Hance. “The value that we provide to our customers in terms of having an affordable and professional solution to refinishing their wood surfaces and cabinets means that our growth is going to continue well into the future. We expect to double the size of our system again in the coming years.”