House flipping is a very popular method of investing in the real estate market. Here the investor isn’t interested in holding a property for the long term. Instead, their goal is to buy a house at a bargain, do a bit of repair work, and sell it off to another buyer quickly at a much higher price.
But, the process may not be as simple as it seems. You see, a lot of research needs to go into finding the perfect property that too at a good price. So if you lack the skill and patience required in this field, it’s hard to be successful as a house flipper.
But can flipping houses make you rich? Well, it surely can if you do it the right way. Here is everything you need to know about flipping houses to make money.
What Is Meant By Flipping Houses?
Flipping houses is one of the many ways of investing in real estate. In this case the investor locates a house that isn’t in a very good condition and requires a bit of repairing which the owners aren’t very keen on. The house flipper then purchases the house at a price that’s much lower than market value and conducts all the necessary repairs to give the house a new lease of life. Once the house is renovated, the house flipper puts it up on the market and sells it for a profit.
To simplify it further, you need to buy the house for less and sell it for more. But getting just any property won’t fetch you a profit. You need to know when and where to invest. It requires a thorough understanding of the real estate market.
Can You Make Money By Flipping Houses?
Well, definitely you can – as long as you adopt a strategic approach. If you are a beginner, below are the steps house flippers usually follow in order to have a higher chance of success in their endeavor.
1. Do a Bit of Research
First things first – you need to research the markets before stepping into the world of house flipping. But how will this help you? Well, for instance, you would have an idea of the areas that are developing rapidly or are high in demand among potential buyers. This will help you narrow down your choices and make finding a suitable property easier.
You see, you are more likely to make a profit by renovating and selling a house in a coveted neighborhood. Moreover, analyzing the market will also help you understand the type of houses people are looking for. And this will enable you to make better choices when it comes to renovating a property.
2. Acquire the Necessary Funds
You can’t be a house flipper unless you have the required funds. You need to decide on a budget for every house flipping project that you undertake, and then acquire the money from a lender. This budget should not only cover the cost of purchasing the house, but also all other expenses related to renovation, taxes, and so on.
This is especially important if you are holding the property for a longer period as you may then need to pay the expenses from your personal funds. And needless to say, this will lower your profit on the final selling price.
3. Find a Suitable Property
Once you have done your research and have the required funds in hand, it’s time to find a property that matches your requirements and expectations. While you can get leads on suitable houses from various sources, getting in touch with a real estate agent is perhaps the best choice. Of course, you will need to pay a commission, but you are also more likely to get a good deal in a high-demand area thanks to their industry contacts.
Once you locate a suitable property, pay a visit to gain an understanding of the condition of the house. Try to evaluate whether the required repairs can be done within your budget. It’s best to have an expert accompany you for the viewing as they are more likely to notice signs of wear that might add to your expenses.
Once you are satisfied with the property, make a reasonable offer to the owner. You might not always be successful in getting the property you desire if others offer a better price than you, but that’s a normal occurrence in this field.
4. Determine the Extent of Repairs
Once you purchase the property, it’s time to take a good look to determine the repairs it needs. While minor repairs can be done in a jiffy, it might take longer if you are doing some major renovation. Therefore, it’s best to set a reasonable timeline within which you want the work to be done, and communicate the same to your contractor.
5. Start the Repair Work
The next step is doing the actual repair work. If the house is in a reasonably good condition,you can easily sell it off after fixing a few things and applying a fresh coat of paint. But in case you are interested in making some major changes to increase the market value of the house, you will need to wait a while. Try researching the popular house designs trending at present and incorporate those within the property. This is likely to fetch you a higher price, especially if it’s situated in a popular location.
6. Put Up the House For Sale
Once you’re done with the repairs, it’s time to put it up for sale. Of course, you may not get good offers immediately, so make sure you have enough funds for all the maintenance and associated expenses while you’re holding the property. You could also consider hiring a reputed real estate agent – they can help you find a profitable deal faster.
So, if you were wondering whether flipping houses can help you make money, hope you have your answer now. Try following a strategic approach right from the start, and you are more likely to end up with a profitable business.
Want to start your journey as a house flipper and looking for suitable properties? Auction flippers can help you locate the best deals that match your requirements.