The real estate industry is one of the best today. As more people see the value in things such as rental properties, the acts of sourcing funds and investing in real estate continue to increase in popularity. Another increasing trend is flipping houses. It is done by many wealthy individuals and is presented as a simplistic venture that yields incredible profit.
Unfortunately, travelling the path of house flipping is not as smooth a journey as television implies, as there are considerations such as the maximum value after flipping that are not usually highlighted. The figures cannot be ascertained with guesswork as research, and a professional valuator may be needed just to arrive at the correct number. If you are interested in flipping houses, consider the points below prior to your decision.
Once you decide to buy a home to fix, you only have control over the repairs of the home. While you can become an advocate for change in a neighborhood, that’s not typically something that is easily achieved (if it can be achieved at all). It is important to conduct adequate research to ensure that the right neighborhood is selected.
The location of a house is one of the driving factors behind the kind of price that can be sought for it. Furthermore, location dictates the willingness of potential buyers to purchase the house you are selling.
Choosing the House
This step goes hand in hand with choosing your location. You may choose to identify a location first then find a house, or you may choose to both simultaneously. No matter which way you decide to get this done, choosing the right house for flipping is arguably the most important step in the entire process.
There is no set of rules that can be used to tell that a house is perfect for flipping. However, there are things you can do to gain confidence in a house. The best way to do this is to discuss your options with a professional in the real estate industry. This may attract a finder’s fee, but their expert opinion usually leads to a solid purchase. You can also attempt to check listings and do independent research.
Time for Calculations
Now that you have found a project house in a neighborhood that is suitable, you still need a bit more information before you are ready to make the step of purchase. It’s time to really crunch those figures to ensure that a profit is to be expected. The house needs a professional inspection and a repair evaluation. If you can do any of these yourself based on your skillset then go ahead. If not, you are going to need the services of a home inspector and a contractor.
The home inspector does infrastructure and fixture checks, while the contractor can give an almost accurate indication of what kind of repair costs to expect. Once you have this information, you need to ascertain the overhead costs on both your purchase and your planned sale of the home, such as realtor commission. Once the selling of the house offsets all the associated costs and yields an acceptable profit (at least 20 percent), then the project can be deemed as feasible.
Getting It Done
At this point, there are only a few things left to do. First, you need to arrange your financing. Whether you are self-financing the project, or you are planning on using a loan, you need to arrange same.
Second, you need to gather all the necessary parties such as the attorney, realtor, contractor, etc. You can then proceed to buy the house and have the renovation started.
Be sure to stay updated on progress, and to meet your milestone payment requirements.
Finally, once the work is completed, and you have paid the contractor, it’s time to sell your home. It is recommended that you hire a realtor for this as there is no end to the benefits involved. The only real downside is the fact that a portion of profit is consumed here.