Flipping Houses for Profit? Read This First
BY: VESELINA DZHINGAROVA ON WEDNESDAY, OCTOBER 12, 2016
Back in the day, before the housing bubble burst, house flipping was huge. To be more precise, even the most inexperienced people with little real estate background and even less startup capital were making a fortune by buying, fixing up and selling residential properties. It’s still possible to make quite a bit of money by flipping houses, but the ceiling has been raised substantially. The good news is that with a well-executed plan and some patience, you can still flip houses for a handsome profit.
Knowing the Local Market
In order to successfully profit from flipping houses, you have to really know the local market. Some house flippers become better acquainted with the local housing market by obtaining real estate licenses or working as contractors. Others learn more about local real estate markets by taking note from companies like H2 Real Estate, paying close attention to home prices based on both community as well as property type. In the end, you have to have a firm grasp of real estate trends, home inspections, property values, taxes and even home insurance costs in order to have a good chance of breaking into the market and netting a good return.
Budgeting for Overages
With house flipping, the very best that you can do is make an estimated guess on what it is going to cost you to complete a project versus how much money you can expect to net. If everything goes to plan, you will make all of the money you invested into purchasing a home and fixing it up, plus a nice profit. The reality is that you have no idea what potential issues might be unearthed until you begin to make necessary repairs. In order to help compensate for money and time that may be lost on an especially difficult house flip, you should allocate a little extra to your budget.
Pricing to Sell
Whether you decide to focus on making cosmetic repairs or plan to completely gut your properties, the key to making a profit is accurately pricing each property to sell quickly. This is where knowledge of current housing trends will be of most benefit. Although you can make great money by flipping a single house, you’ll have bigger gain by completing multiple projects. As you gain more experience, you’ll be able to negotiate better deals all around, allowing you to flip houses faster and establish yourself as a real estate investor.
Be Open to Renting
Sometimes properties can fail to sell no matter what you do to entice buyers. The longer a house sits on the market, the longer the seller is responsible for paying for its upkeep. If your goal is to make money flipping houses, it is not advised that you proverbially leave money on the table any longer than required. While you might not have ambitions of becoming a landlord, renting a home that doesn’t get bought in a reasonable amount of time is a great way for you to keep overhead costs down. You can always have a rental agreement written up that includes a clause that allows you to sell the property prior to the lease expiring.
If you like hands on projects and genuinely enjoy wearing several hats at the same time, house flipping just might before you. Flipping houses requires people to think fast and respond even faster, all while keeping a calm and professional demeanor. With house flipping again on the rise, it’s best to strike now while the iron is still red hot.