House flipping was one of the most profitable business investments before the real estate bubble burst in 2008. The real estate industry has changed dramatically and with too many players in the market, it is not an easy task anymore. However, house flipping is still a very lucrative business provided you understand what you are getting into. If you are planning to flip your house for better returns, here is a complete guide for the process.
How to Make Money by Flipping Houses in the Market?
Know What You’re Doing
There are plenty of house flipping shows, which highlight house flipping as a simple walkover. House flipping requires a considerable amount of investment and it is important to be aware of the rules of the game. Always consider the additional cost such as cost required in obtaining permits and similar legal obligations. It is an excellent idea to consult an expert realtor before getting into the process.
Never Underestimate Potential Problems
Flipping house offers great rewards and it is susceptible to even greater risks. You might encounter a problem even after a planning of several months. These potential problems are quite common in old houses. You will come to know about these problems only after an inspection and some of these problems include mold, plumbing issues, poor wiring, and similar repairs. It is always advised to keep a contingency fund (20% of the investment) for these potential problems.
How Fixer Upper Can Change the Game?
It is always an excellent idea to go for a fixer upper. A house that requires updates and repairs can help you make good money with small investment and efforts. You can look for the plus points of the property such as big rooms, excellent décor, and a large backyard garden. If you are flipping a house for the first time, choose a house that requires minimal upgrades. Avoid houses that might jack up the cost and efforts to another level. Evaluate the potential of the house and the money you can make with it.
Is It Worth The Effort? Evaluate Your Profit
The best start in house flipping is to get a low-priced house. However, make sure that you don’t have to spend a fortune for the repairs. Some of the most expensive projects include:
- Restructuring of structural walls
- Fixing the roofs
- Relocating a chimney or fireplace
- Gutting or moving bathroom/kitchen
- Fixing foundation issues
These are some of the most expensive repairs that you might come across in the house flipping process. If you are planning for a long-term career in flipping houses, it might be useful to develop relationships with a contractor. Your contractor will provide an exact idea of the expenses before purchasing a property.
Choose a Location/Neighborhood Carefully
An excellent society ensures quick sale of the house, although the property can be expensive in such neighborhoods. A low-priced house in a good neighborhood might require extensive repairs. Make sure to compare the overall cost and expenses with the current rate of the houses in the area. Avoid a home, which is outside a community and off-the common amenities such as public transport, schools, and shopping centers.
Work on the Curb Appeal of the House
How would you make a profit if the buyer were not willing to come inside the house? It is important to consider the curb appeal of your house. You should not spend a fortune but make tricky upgrades such as paint the garage door, clean the roof, and bring the garden in shape. Make sure that the house looks clean and ready to be occupied. No one would like to buy a house with whitewash stains on the floor. Get suggestions from a landscaper and keep it within your budget.
House flipping is stressful. Everyone is aware of the work and effort required in a house flipping process. Flipping houses is one of the biggest commitment businesses you are going to step into. It is always best to finish the biggest jobs first and save some extra money for smaller ones. You might do some of the easy tasks by yourself in the first few houses. The key is to learn from your mistakes and avoid them in the future. Not every house will turn profit and it is important to be able to bear small losses. If you are willing to put efforts for making money, flipping houses is the right business for you!