6 Ways to Flip Houses and Turn a Profit
One of the best ways to make money in the real estate game is by flipping houses. Similar to other investments, this practice involves a fair amount of risk and a oodles of work. For these reasons, it’s essential to exercise caution when ‘house flipping,’ and to remain as informed as possible.
So, how can you make money from buying houses, cleaning them up, and putting them back on the market for sale?
Listed below are some of the most important guidelines to follow when buying and selling houses.
Have Great Credit, Or Tons of Loose Change
The primary goal when flipping houses is to invest in relatively inexpensive property, repair and refurbish this property, and, ultimately, turn a profit with its sale. However, if you’re part of the more than 30% of Americans that have bad credit, or just don’t have the investment capital, then buying a home might not be for you.
Therefore, before jumping into the real estate market with dollar symbols in your eyes, be sure to check your credit report. Nowadays, this check can be done by requesting your documentation from any of the three major credit reporting agencies in the US, i.e., Equifax, Experian, and TransUnion. Chances are, if your credit score isn’t up to snuff or your funds are running a bit low, you should probably take some time to build up your investment capabilities.
The real estate market offers a wide range of property types, including everything from studio apartments to luxury mansions. So, how can you decide which kind of property is best for you?
Of course, answering this question is in exactly cut-and-dry. When entering into the real estate market, the type of property you buy for your first investment depends on the amount of capital you have, your experience flipping houses, and extensive research regarding the market.
However, if you’re new to the game, it’s probably best to start off small. Investing in standard homes is wise since they generate the highest demand. A standard home usually is characterized by having 3-4 bedrooms and being suitable for small- to medium-sized families. Mostly, you’re trying to find a house that is easy for you to sell after fixing it. To the same effect, it’s important that you estimate your renovation costs accurately, so you don’t go broke in the process.
Find a Profitable Area
Finding a profitable neighborhood or location is a significant consideration when fixing and flipping houses. After all, you could turn a rundown house into a mansion, but if it is in a poor location, you might never sell. That’s why it’s vital to research potential investment areas and compare profitability with other sites.
A couple of things to look into are how much similar homes in the area are selling for and how long properties in that area stay on the market. Not to mention, it’s also good practice to find locations nearby when you’re just starting. That way, you’re not overwhelmed when conducting your investment research.
Use a Fine-Toothed Comb
Researching every detail is critical when considering your real estate investment options. Make sure you are thorough in your research and account for any factors which might influence your sale. It’s best to do a cost-benefit analysis to make sure nothing bites you in the rear end down the road.
Additionally, make sure to take full advantage of any home inspection services in your area. If there are any deep-seated issues regarding a potential property, it’s probably best to pass. The ideal house for flipping should only need minor improvements to maximize your profit, not a complete overhaul. Therefore, conducting a formal house inspection will help you avoid possible ‘money pits.’
It’s also a smart move to investigate current market trends. Please take note of which home improvements buyers might be more willing to do themselves. Also, make sure to examine trends about the surrounding area as well. For instance, is there going to be any construction taking place in the near future that might increase or decrease the value of your property?
By checking on these factors, you’ll have increased awareness about prospective investments and are more likely to succeed.
Find the Right People
If you think you’re going to buy and flip houses by yourself, you’re in for a rude awakening. It’s critical that you pair up with people that can make the process easier for you, and profitable for everyone. Even though you may be able to conduct market research, can you rewire an entire home or install a new roof all by yourself? That’s why it’s critical you have a professional and reliable team of realtors, legal counselors, and home inspectors. You’ll also need an excellent contractor with dependable workers. Not only does having a good team make for a quick flip, but it also cuts down on unnecessary stressors.
Turn and Burn!
When buying and selling homes, it is incredibly important to flip your investment quickly. After all, the longer a property sits on the market, the more money it will cost you in the long run. Again, the need for urgency in this business requires you to have an efficient and effective team. To maximize your profit, selling your investment property quickly should be your primary focus.
Even though you can make a significant amount of money flipping homes, it’s crucial you understand the proper steps to follow.