If you are thinking of making a good profit through investing in real estate, flipping houses might seem like a good choice. But, buying, renovating, and selling a property might not be as easy as it seems, especially if you are a beginner.
Before you engage in house flipping, you first need to gain a solid understanding of how the process works. And once you know the right approach, you’ll be much more likely to succeed in your endeavor. To help you out, here we have everything a beginner in flipping houses needs to know.
What Does Flipping Houses Mean?
For the unversed, flipping houses is when you buy an old property, do some repairing and sell it off at a good profit. Usually, they buy worn down properties that owners aren’t willing to repair, and transform them into appealing houses.
House flippers need to be smart in choosing houses that have the potential in selling for a good amount after doing the necessary renovations. The main aim here is to buy it for a low amount and sell it for much more. Usually, house flippers hold on to a property for a short time – maybe a few months to a year depending on the market.
How To Get Started With House Flipping?
Now that you have the answer to what is flipping houses, it’s time to plan your approach. To help you in the task, below is a brief overview of the different steps you need to go through while flipping houses.
1. Set An Investment Budget
First things first, you need to research the local real estate market and come up with a feasible budget that covers all the related costs. If you are just starting out as a house flipper, it’s best to go for houses that need fewer repairs as you may otherwise go way over your initial budget. Once you have decided on your budget, you need to acquire the necessary funds. It’s best to compare the interest rates offered by different lenders before borrowing the amount.
2. Locate The Right Property
After you are done with sorting out the budget, it’s time to look for properties to buy. It’s best to get in touch with a real estate agent as they can help you find profitable properties within your budget.
Make sure to pay attention to the location as well as the amount of repairs the house needs before making your final choice. Properties in coveted locations are sure to bring in a lot more profit after renovation.
3. Purchase The House
Once you have the necessary funding and have shortlisted the properties you want, it’s now time to put forward your offer to the owner of the property. Of course, there is a chance that your offer might fall through due to some reason. Therefore, it’s best to shortlist a few properties so that you can move on to the next in case the earlier one doesn’t work out.
4. Start The Renovation Process
After successfully acquiring the property, it’s time to start the repairs. But, it’s crucial to proceed according to a plan here. You see, if you don’t start the repairs in a planned manner, there’s no way you’re going to get everything done within time.
Also, choose highly reputed contractors for renovating the property. Most of them have an experienced team who can help you return the house to its pristine glory within a reasonable period.
5. Put The House Up For Sale
Once you are done with the repairs, now it’s time to sell it! While you can put it up for sale all by yourself too, it’s best to hire a real estate agent for the same. These professionals will be able to help you find potential buyers faster thanks to their widespread network.
Advantages Of Flipping Houses
Flipping houses is a good idea if you want to make considerable profits without holding on to a property for the long term. Below are some of the advantages you can enjoy as a house flipper.
Good Earning Potential
Repairing and reselling a house has the potential to bring you huge profits within a comparatively short period. Usually, it depends on several factors including the amount of repairs, the time required to fix the house, as well as the current market rate. Thanks to the immense earning potential, you can easily make it a full time profession once you gain the necessary expertise.
Better Understanding Of The Local Real Estate Market
To succeed as a house flipper, you need to conduct extensive market research to understand the trends that are more profitable at present. This not only helps you redesign the property to suit the current trends, but also provides you a solid understanding of the real estate market.
Building Industry Contacts
Flipping houses require you to network with a lot of people within the industry. These may include real estate agents, contractors, investors, attorneys, and so on. As a result, you develop new contacts which can come handy in the future.
Some Potential Risks of Flipping Houses
While flipping houses can be profitable at times, it does come with its own share of risks. Here are a few issues that you might face as a house flipper.
Flipping houses can sometimes result in losses too. This may be due to delays in renovation, unexpected expenses, taxes, etc. As a result, your total investment may exceed the final selling price of the property.
Can Be Stressful
You may face several issues throughout the process of flipping houses. From locating the perfect property to dealing with the reparwork and finding a suitable buyer – a lot of stress is involved in this field.
Being Unable To Sell It Off Quickly
Often it may happen that you are unable to sell off the house as quickly as you planned to. And the longer you own the property, you are responsible for taking care of all the additional costs related to maintenance, taxes, insurance, etc.
Flipping houses is a comparatively low risk approach of investing in real estate. By researching the market well and creating a solid strategy right from the start, you have a better chance of succeeding in this field.