Flipping houses as an investing business seems to be getting serious momentum. There are countless shows and tv series talking about flipping houses and hefty profits that you can collect from this very lucrative real estate business. But, just like with so many other things, the projection that you see through pop culture is much different in reality. Getting started and gathering valuable knowledge for this type of investing will take a lot more than just a few express classes and TV show following. The best way to learn is by experience. Still, some things can be learned in advance as well. So, let’s get started.
Tips and Tricks for Flipping Houses for a profit – beginner’s edition
To keep a long story short, the point is to buy a property that needs fixing, fixed up (add value to it) and sell it for a greater price. If you do it right, you should be left with a nice injection in your bank account. However, just like with many other things, this is easier said than done.
1. Flipping houses is risky and sometimes difficult to do
We are paying quite a lot of attention to how difficult this type of real estate investing can be. Since many take this type of business lightly and get burned down the line, we have to emphasize the difficulty aspect of this type of work. These ventures functions at a fast pace with lots of decisions that must be made quickly and surely. The benefits can be sweet, but the process can easily go sour.
2. Assess your financial situation
When you start with flipping houses you must ask yourself do you have enough money to do it on your own? If your answer is no you will need an additional investor or a lender? Even though you are looking to purchase properties below market value and then fix them, it will demand significant financial liquidity.
If you don’t have enough funds or experience to get the job done on your own having a partner is a great idea. Splitting the profit is a better option than not having a profit at all. Alt-text: two hands shaking after a deal.
3. Have a Flipping team in place
Once you have your money situation figured out it is time to be a team player. You must do three simple things in order to be successful: purchase, fix it up and sell it. Nobody can do all three on their own. Therefore, you will need some serious backup. When you have a team of professionals working on a project it is much easier to deal with challenges. Also, the quality of work being done is much higher. For example, visit bigmansmoving.com and hire them to move out unneeded items from the property. Hire a professional contractor to oversee your renovations. We can go on and on, but you get the picture. Let the pros do what they are best at.
Having a team in place will increase the quality of work and ensure functioning at a faster pace during a project. Alt-text: a woman presenting a plan for flipping houses to her team.
4. Find the perfect house for Flipping
This is when things get even trickier. Finding the perfect property to get it fixed up is hard enough. But, once you pinpoint an area where you would like it to be, things get even more challenging. Focus your attention on properties that need less expensive fixups and renovations. Nevertheless, make sure they will up the property value. Otherwise, you will be left in a serious pickle.
Also, make sure the buying price of the property isn’t too high. Houses sold before foreclosure closure or similar situations, bring the property value down significantly. If flipping houses is the goal, that is when you need to swoop in and purchase a property with great flipping potential.
5. Don’t forget to do the math
ARV (after repair value) is what this business is all about. No advanced knowledge is needed to get the job done in this case. Take your estimated ARV, subtract fixing costs, property buying price, and see what you are left with. What is left is what your profit should be. While you are at it, dont forget to include your costs of your team members in the fix-it section of your calculation. Professional services aren’t cheap. Consequently, they can easily add up and cause a financial problem.
Profits are the main motivation behind house flipping. When diving into a project make sure that all indicators point to a substantial profit. Alt-text: a man looking at a presentation that is based on profit calculations.
6. Manage the process tightly
We already mentioned that you will have help in your corner. However, you still want to oversee the entire process. For instance, you will sell the property with the help of a real estate agent. While he or she is working their magic, make sure you are in close proximity. Especially when starting off. Once trust is built over time you can delegate some overseeing. In the beginning, make sure there is no room for error.
In case you decide to keep what you worked for
It isn’t uncommon for investors to like the property they fixed up so much that in the end, they decide to keep it from themselves. If that happens to you as well, make sure you have once again adequate help by your side. While flipping houses you don’t have extra time on your hands to move on your own. That is why you should hire the best possible movers you can find and always try to hire locals. Locals will know the territory and they will get the job done in no time, so let professionals jump in and take care of your relocation.
Is it worth the hassle?
By now you have a more concrete idea of what goes into flipping houses. It is a much more difficult business than it might seem. But, if you learn to do it well and make smart and fast choices the rewards can be major.