You have heard about fix and flip, wholesaling, etc., but what is micro-flipping? Does it require huge capital? What is the profit margin in micro-flipping? Is micro-flipping a good option for newbie investors?
If these are your questions, you’re in the right place.
Should You Start Real Estate Investing by Micro Flipping?
Differences Between Micro-Flipping & Fix-Flip
In fix and flip, investors purchase properties, upgrade or renovate them, sell them at a higher price. And because of this, investors have to hold the properties for a more extended period. And when you hold properties for a longer duration, you’ll require continuous cash flow, decent experience in real estate, and time.
On the flip side, in micro-flipping, investors purchase the undervalued houses and sell them without doing any renovation or repairs. Because of this, investors don’t have to hold properties for a longer duration. Usually, it takes about 1 to 7 days to complete a deal. As you won’t be holding properties for longer, you’ll have smaller profit margins.
Pros of Micro Flipping
· Internet-Based
When you do traditional real estate wholesaling or flipping, you’ll have to physically visit houses and meet buyers. But in micro-flipping, you’ll be doing almost all the stuff online. Because of this, your investments won’t be limited to one state only. You can purchase properties in several states without physically traveling there.
· Fast Transaction
In micro-flipping, you can complete the transaction in a short time, in less than a week. This is very beneficial, especially when you are making small profit margins.
· No Renovation Required
When you purchase regular properties, you’ll have to do repairs and renovations before selling them. And this costs both time and money. But in micro-flipping, you won’t have to do repairs or renovations. As soon as you purchase a house, you can sell it without doing any repairs. Here, you’ll be acting as a middleman.
· Requires Minimum Investment
If you’re new to real estate and have small capital, it’s highly recommended to do micro-flipping. Because if you want to purchase regular houses, you’ll have to invest hundreds of thousands of dollars. But in micro-flipping, it’s not required. Besides, you can use the hard loan to complete your transactions.
Downsides of Micro Flipping
· Requires Tech Knowledge
As I mentioned earlier, when you’re micro-flipping, you’ll be doing almost all the stuff online. So to do them, you need to be tech-savvy to a certain level. That’s why young people mostly do micro-flipping as they are more used to tech products. However, this doesn’t mean older people cannot do micro-flipping. Usually, people with years of experience in real estate prefer to hire tech-savvy people for micro-flipping.
· Small Returns
Don’t expect to make a 2x or 3x return from each deal in micro-flipping. If you want multi-bagger returns, you should consider investing in traditional houses or doing regular flipping.
Verdict
Micro-flipping is a great way to start investing in real estate, especially for those who have small capital and no experience. But if you have been in real estate for years, it’s advised not to start micro-flipping. Because the profit margins will be low and may not give you a high ROI.
