In the world of real estate, we hear a lot about flipping houses and how profitable they can be. The question is, does it really make sense in the Jamaican market context, to buy a fixer-upper and flip it for actual profit or is it more likely to be a money pit? Many of us binge-watch those HGTV series and we see people buying dilapidated properties, fixing them up, and then making a bag of money in profit. We see the lifestyle of these people making a lot of money in real estate but can we use that same strategy in Jamaica? Is flipping even a thing in Jamaica?
On these shows, when they buy properties they are able to quickly do the renovations and then sell the properties after a short period of time and make a profit. In Jamaica, real estate transactions take a much longer period of time. We’re talking 3-6 months to buy a property and then we can probably do a renovation in another 4-6 months. To sell that property is another 3-6 months so we are looking at probably a year and a half to do this whole fixer-upper flip strategy.
Does that really mek sense? The thing is, on these TV shows what they don’t really tell you is that many of those people who are flipping, they will borrow money privately from a private lender or a small bank. When they borrow that money to do the renovations, they have to pay interest. As a result, they are always in a race against time to hurry and finish the purchase, the renovation, and the sale in the shortest amount of time possible to avoid a lot of interest. If you put that in the Jamaican context where it can take you 18 months to complete a transaction, that is a lot of interest to be paying. Especially given the period of time we are in now when interest rates are increasing, you easily end up in a money pit, a money trap. In Jamaica, it takes a long time for you to go through the different legs of the transactions involved in flipping real estate. So what you see on TV may work for them but in reality, it really depends on the type of market you are really doing this strategy in.
For right now in the Jamaican market what really has stood the test of time and has worked from generation to generation is buying and holding real estate. While you hold real estate a lot of people either do short-term rentals or long-term rentals. Whatever the decision is on how to run the business of real estate, buy and hold seems to be the winning strategy within the Jamaican real estate market.
Determining whether buying a fixer-upper in the Jamaican market is a viable option for flipping and generating a profit depends on various factors. While it is possible to make a profit by renovating and reselling properties, it is important to consider the specific conditions of the Jamaican market and the potential risks involved.
Ultimately, the profitability of flipping a fixer-upper depends on careful research, thorough planning, and a realistic assessment of the market conditions. Before getting into the real estate business of flipping for profit, consider engaging with local real estate professionals and experienced contractors who can provide valuable insights and help mitigate risks. Speak to financial institutions and consult with other industry professionals to help guide you through the process.
Have you ever thought about flipping houses for profits? Or Have you been successful at the fix-and-flip strategy in Jamaica? Share with me in the comments. I want to hear from you.
