Investing in real estate is a lucrative way to earn a living. Some people buy property to flip in an effort to make additional cash along with their salaries. Others are content to invest full time and make it their livelihood. What’s your idea of house flipping success?
As you most likely know, there is great potential to make solid returns when flipping houses. But this doesn’t happen by accident. You can’t buy a house and flip it and expect to be successful if luck is your only guide. In fact, if you hope to get lucky with one investment after another, you’re most likely going to lose more money than you’d care to admit.
So, to achieve success in this endeavor and become a house flipping mogul, you need to begin by learning the basics. That’s the perfect place to begin at the start of your journey. And it will allow you to establish a foundation that will set you up for flipping success for many years to come.
Are you ready to learn the basics of flipping houses? Keep reading to discover the best info to begin your journey on the right foot.
Choosing the Ideal Investment Property to Flip
Getting started might seem easy on the surface but it’s critical to get this part right. You may think that it will be easy peasy to find and buy a property that needs work. But there’s more to it than that. At this stage of the game, you have to be willing and able to do your research. It may seem boring on the surface, but this part is vital to your investment success.
How is it vital? Well, you not only have to find a house, but it also has to have potential to be desirable to other buyers. You need to find something that was beautiful at one point but the previous owners let it go and never kept up the place. And it needs to be in a desirable neighborhood that your ideal buyer wants to live.
Remember, you’ll have to sink a pretty penny into this house to make it look attractive and desirable to new buyers once the renovations are completed. So you can’t spend too much money to acquire it because you may have a hard time flipping it at a profit after the remodeling is finished, but we’ll get into this in greater detail below.
So, at first you need a rundown house with good bones in an even better neighborhood. Because once you give it some TLC it should be a lot more valuable than the amount you paid. It’s your best bet at winning in the flipping game.
The Math Behind a Quality Property Flip
You discovered what appears to be a great property, but now you have to determine if the math adds up. Because if it doesn’t, you may find yourself in an expensive losing scenario and nobody wants that, right?
So, first things first. You have to know and stick within your budget. If your total budget is $150,000, give or take a little more, you can’t spend over this amount with a combined sale price and renovation expenses.
As an example, let’s say you find a gorgeous single family home in a great neighborhood for $120,000. You look it over with your contractors and determine it will cost $45,000 to fix so it’s ready to be put back on the market.
What happened in this scenario? You overextended yourself by $15,000 which is no good. Even if you can borrow the additional capital for renovations, there’s no guarantee you’ll sell the place fast enough to pay back the money in a timely manner. So find something that fits within your budget and never deviate because your chances of failing become much riskier.
Purchasing the Property
Buying the property itself needs to be treated with the utmost care and consideration. There are certain scenarios that are much better to purchase a house in than others. Like when a homeowner is on the verge of being foreclosed and the mortgage company is about to take their house, their credit, and everything they’ve invested into the place.
Guess what? You can make great purchases when a homeowner finds themselves in difficult financial situations like a foreclosure. Because life stinks sometimes and people are forced to sell their property for numerous reasons even if they really don’t want to. So make the most of these situations and don’t feel like you’re taking advantage because you aren’t. You’re actually helping the homeowner solve their current financial crisis and you’re making a solid investment at the same time.
Fixing Up the Place
Getting your renovations started right away is the key to success in the property flipping game. As you can surmise, the longer you wait, the less profitable you’ll be. You’ll have to pay property taxes and upkeep and electric bills and water bills and other expenses for an extended length of time if you take your sweet time getting the renovations finished so don’t wait.
Are you fixing the house up yourself? Or are you hiring a contractor? Either way, you have to take steps to get the ball rolling as soon as you take ownership of your latest investment. Remember, time is money so the longer you wait the more money you waste.
Putting Your House on the Market
It’s time to sell your beautifully renovated home. Get excited! The big payoff is about to happen.
Consider two options: selling the property yourself or listing it with a real estate agent. Both methods have their merits but only you know the best option.
If you have the time, skills, and resources, you’ll save a bundle on commissions if you sell it yourself. If you’re pressed for time and have no clue how to sell a house, pay an expert to handle the heavy lifting on your behalf. It will be worth it just to sell the property faster.
Entering the house flipping game has the potential to be really lucrative and many investors live great lives because of this industry. Do you have what it takes to be one of them? Use this information to get started and you’ll soon be on the path to house flipping success.