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We’ve flipped just about everything. Today we’re talking about why we stopped flipping houses and started flipping high-profit items on eBay.
I have flipped six houses in my life. And then, I went the opposite way and started looking into high-profit items to flip. Today we’ll give you the breakdown of why we did that and why it made sense for us in our business.
We don’t think real estate is a bad investment. We’ve always made money when we sold houses, but we regretted selling them. Some people do well flipping houses.
When you’re flipping houses, you’re doing it for short-term investment. You’re trying to buy it at a low cost (similar to what we do when flipping for eBay), turn it around, and make good money. But there can be downfalls, and one of them is that there is a lot of red tape when flipping houses.
You Have More Money Tied Up
When you purchase a house to flip, you have a lot of money tied up for longer. Typically for a second or investment home, you’re going to put down 20% on that house. If you’re buying a $100,000 home, you’ll have to put $20,000 into it just to secure the house. You have to have that money in your account to be able to put it down at closing.
You also have to pay an inspector to come out and inspect the house and complete survey work. This has to be paid before you even start renovating, and you don’t get that money back. You must ensure that the house is worth the money the bank is loaning you.
Then there are additional expenses for the rehab of the house, including supplies and labor.
This adds to a lot of money you’ll have to put down. Think about what type of return you are getting on this investment.
That’s why we went into the high-profit items more because you don’t have to invest that much and tie up that much money at once.
Is The Return Worth It?
One of the houses I sold had a return of $33,000 profit, and I got half of that because I went in on it with someone else.
So when you look at the time, effort, and cost that goes into the house, it’s a lot of money and red tape for a smaller return.
Some people say you can’t make $10,000 flipping a single item, and that’s not true. You absolutely can if you’re in the high-profit niche. We specialize in that because you don’t have to put a lot of money in to get the item.
For example, we bought a Turbo Chef for $400 and sold it for $10,000. We paid shipping and eBay fees and profited roughly $9,000 for five hours into this. It’s not an everyday thing, but sales like this can happen. The month prior, we made $7,500 from a lift we pulled out of the trash. I put $600 into it with new batteries and a new wheel, but we still made a considerable profit. You can do that with a lot less red tape.
Houses Take More Time To Flip
We didn’t even talk about how much time it takes to flip a house. Just closing on a home takes 30 days with the paperwork and title search. You must also buy homeowners insurance and wait for the sale to close.
That’s not even including the time spent searching for a house that can work for you. It’s hard to find $100,000 homes to flip right now with how the housing market has been. Even finding a house that has the potential to be flipped can take some time.
With the Turbo Chef, I had only about five hours to make that $10,000. Last year we averaged $1,400 per item and had 58 sales the entire year. There is potential in high-profit flipping, and it is a lot less red tape, less stress, and fewer hoops.
I flipped houses about 16-20 years ago. I liked it because of the hunt and the negotiation. Those are both things I can still get while flipping high-profit items.