If flipping were as easy as finding a cheap house online, buying it, and selling it for a profit, we’d all be real estate billionaires. You must educate yourself before you even start looking at homes. Here’s what you need to know and How to Flip a House
Learn Your Market of Real Estate
First, research your local real estate market. Where do people want to live right now? What kind of house do people want to buy right now? Don’t speculate about up-and-coming neighborhoods. Remember, you want this house sold fast.
Understand Your Finance Options on How to Flip a House
Next, become an expert on home financing options. Will you buy a house with cash? Will you apply for a home mortgage loan or apply for a loan? Make sure you understand the ins and outs of home financing before you apply for a loan or make an offer on a house. This will allow you to make the best decision for your circumstances.
Learn to Negotiate
The less money you invest in a house, the more money you can earn during the flip. Good negotiation strategies will help you effectively haggle with flipping, contractors and other workers.
Learn How Much Average Projects Cost
Do you know how much it costs to recarpet a 1,000-square-foot home? Rewire a house? Build a deck? Landscape a yard?
Every project is different, but with some experience, you can learn how to estimate the costs of many home renovations and get an idea if a particular home is a good buy or not. One of the best ways to build your experience with this is to do some renovations on your own home. This can also give you a general idea of the type of projects you like to do and which projects you’re better off hiring out.
Know which home improvements increase a home’s value and focus on these projects first. These might include upgrading kitchen appliances, repainting the home’s exterior, installing additional closet storage space, upgrading the deck, and so on.
Network with Potential Buyers
Network extensively and talk to potential buyers before you even start looking for a house to flip. Do whatever you can to build relationships with future buyers. If you have a buyer lined up when you purchase an investment home, the home sells as soon as the updates are completed.
Make an Offer
Once you find a home you like, it’s time to make an offer. If it’s a great house selling for a low price, you might have competition. For many flippers, flipping is a full-time job, and they will likely know about this house too. You can sneak by the competition by targeting a neighborhood and going door-to-door making offers.
Before you make an offer, make sure you know the highest price you can pay for a house and still make a profit. This includes your estimate for repairs, interest, and taxes. Remember to pad your estimate by 20%. If the homeowner or bank won’t sell to you for this price, walk away. It’s better to keep looking than risk going broke from a bad investment.
Find Good Contractors
Getting to work with good contractor will be good. A general contractor, or GC, is a building professional who manages the whole renovation project and hires their own subcontractors to do the necessary work. Hiring a GC can be expensive; they’ll add 10% to 20% onto what their subcontractors charge when calculating your final bill. However, they can be worth their weight in gold if you find a great investment opportunity.
A good contractor can help you avoid costly renovation mistakes and save you a significant amount of time on a project. This means you can get the house up for sale faster. If you’re flipping a house while working a full-time job, hiring a GC is probably a necessity; someone has to be available at the house to oversee the work at least part-time, or the project will never get done.
A general contractor will also be in charge of obtaining the necessary building permits. This means their name will be on every permit, and they’re responsible for making sure the job is done right for every inspection. Make sure to apply for permits as soon as the sale is final to save time and get the process moving.
It’s a smart idea to start building a network of quality contractors before you make an offer on a house. Remember, it can take a long time to find good help.
Keep in mind that most experienced flippers try to have a home bought, renovated, and relisted within a period of months. That’s a quick turnaround time, and for your first few flips, it might be out of reach. But the longer your home is tied up in projects, the less profit you stand to make; that’s why it’s so important to carefully weigh your options in house projects.
Relist and Sell
Many flippers end up listing their homes with a realtor. Realtors eat and sleep real estate, they have access to buyers, and can list your house with many contacts they have or interested in buying. They also know the current market fluctuations and have the skills and network to get you the best price quickly.
You can also choose to sell your house yourself. You’ll save money in realtor fees, but in some markets, you might end up waiting a long time for the house to sell. In addition, listing and showing a house takes time. If you can’t be available every time someone wants to see the house and you don’t want to host open houses, working with a realtor might be the best choice for you.
There’s no doubt that flipping houses is a risky business. If you make smart decisions, you can make a lot of money flipping. But you can also lose everything if you make a bad investment.
Before you get into the world of house flipping, do your research to make sure it’s right for you.
Have you ever flipped a house? What was your experience like? What do you wish you’d done differently?