Do you consider yourself handy and have the financial means to buy more property? If so, house flipping is a great way to put your money to work.
On top of that, it’s one of the biggest reasons some investors invest in real estate. Reports show that 10% of all home sales are house flips.
Do you want to learn more about how to flip a house? Keep reading to learn what it takes to find success in home flipping.
Determine How You’ll Finance Things
Financing is the number one thing to get right when you decide to flip a house. You probably don’t want to front the entire cost of a home. After all, you put yourself at more risk when you do this and limit other investing opportunities.
Getting a mortgage from a traditional lender will work fine for most people. Be upfront with your mortgage providers about your goals and show a roadmap to getting a profitable result. The process you’ll go through will likely be similar to the one you’ll go through with a traditional mortgage.
You can also bring on private investors if you know anyone who wants to start investing in real estate. You can do this with friends and family or reach out to local investment groups to see if there is anyone who wants to start investing in property.
Find a Market
Your market choice is critical if you want a successful house flip. A great deal in an underdeveloped area isn’t worth much if nobody wants to buy in the location. On the other hand, developed regions may have less profit and won’t be worth the time and energy to develop homes.
Many people find the most profit in developing areas. Look for locations with a lot of developments that are increasing in value faster than surrounding areas.
Ideally, you want to pay around 70% for a home compared to the money you expect to sell for. This will leave you a decent profit after all real estate fees and home improvements you make.
Learn the Local Laws
You can’t just do whatever you want when you buy and sell homes. You have to consider local building codes and selling laws in the areas you buy.
Try to learn everything possible about your legal requirements when flipping houses. Each location will differ, so learn about the local environment before anything else. Once you know the local rules, expand your search to state and national laws.
Of course, the law isn’t for everyone. Contact real estate lawyers if you need help understanding your legal requirements.
Get a Network to Help
Sure, you can start investing in real estate and handle improvements yourself. However, you only have so much time in the day. Do you want to spend it taking care of issues other people are better at doing?
It makes more sense to hire help to handle home renovation projects. Search for local contractors who are great at their jobs and use them to tackle your renovation needs.
Doing this will free up your time to work on other tasks and further expand your investment portfolio.
Learn Proper Valuation
Understanding the value of a home will be vital to your success as a house flipper. You’ll waste too much money if you overpay for a home and don’t understand the renovations you need to take.
You’re probably going to buy a fixer-upper, so the first thing to understand is how to spot issues. Either learn how to spot them yourself or bring help along to help you find problems. This will help you make better offers since you don’t need to do a complete home inspection.
You’ll also need to understand a home’s value after making improvements. Look at the surrounding area to see the average home price and if your property will match that value after you finish your work.
Understand What Not to Improve
It’s tempting for real estate flippers to over-improve homes. They want to create the best deal possible, so they invest in the best home improvements they can.
The problem is not all those improvements are worth the money. At best, you’ll break even on the home improvement costs. In worse cases, you’ll lose money on an improvement.
Learn what improvements add the most value to a home. You only want to focus on core home issues and enhancements that add more value to the house than you spend on the improvement.
Find a Realtor to Help
You can handle the real estate buying and selling process on your own. However, that probably isn’t the best use of your time. Finding and selling a home is a unique skill that’s hard to acquire if you don’t specialize in the practice.
Even if you can find great deals, you can speed up the process by finding a realtor to help. A realtor can help you spot new deals, negotiate with buyers and sellers, and handle the legal part of the real estate transaction.
You’ll spend some money on selling fees, but the value you get in return is worth the money.
Now You Know How to Flip a House
Investing in real estate isn’t something you should do lightly, so it makes sense to learn everything you can to start the process the right way. A lot goes into home flipping, which means you have much to learn if you want to do it right.
However, now that you know more about how to flip a house, you’re better positioned to start with real estate investments. Remember the guide above when flipping a house to get started the right way.
Check out the blog for more tips that will help you buy great investment properties.