By the time you read this article, you should be aware that the house prices are increasing at a faster rate. This is the reason why several people consider house flipping today. But, a majority of people who are moving forward with the process of house flipping are not very successful. This is because they are immersing themselves into the process of house flipping without proper professional guidance from the people like us. We, at topremodelers.com, are in this field for several years now and we can guide you through the whole process.
Remember, in order to be successful in your house flipping, you need to consider a lot of aspects. Here is the list of things what we feel are the best tips for the beginners. So, continue reading…
What is meant by House Flipping?
It’s called as house flipping when the real estate investors would buy a home, most often at auctions, and then resell the same at a profit. Now, you might ask us a question here. Can you make some money doing a house flipping? Our answer is “yes” but only if you are making a good decision. In this, you will be at the risk of losing all the money if you happened to take a bad decision. Now, don’t worry. As a beginner in the house flipping industry, you can follow the below guide to carry forward your house flipping business in a proper direction.
Where to get started?
You are advised to have an excellent credit score before entering into the job of house flipping. This is especially needed if you are looking for some home loan for buying the house. We say this because the present day lenders are very strict and they have tightened their prerequisites when it comes to home loans. Also, you should have enough cash for the down payment. You can also go for a home equity line of credit, otherwise called as “HELOC” if you qualify for the same.
Here, remember, it’s not mandatory that you need to go for home loans while trying to buy a house for flipping. If you have sufficient amounts in your savings and if you can manage to find the bargain-priced house, you can very well go for it. In these cases, you would need to take a smaller loan or line of credit for only the renovations.
Education is Important:
For any business to be successful, some ground work is needed. Similarly, when it comes to house flipping, you need to learn about real estate market. Just think, if you can find homes at cheaper prices online, buy them, and resell them at higher rates, there were lots of real estate billionaires out there, isn’t it? In order to carry out a successful house flipping, you must understand that the process is not simple. You can overcome all the difficulty in the process by educating yourself before you start looking for homes. So, what are the important things to learn in house flipping?
One must get to know the ins and outs of the local real estate market. In this, you must try to learn where people would like to live, what kind of house would people buy, and so on. We would suggest you not to speculate about the upcoming neighborhoods here. We say this because you need to resell your home as quickly as possible. Therefore, you need to study about the current scenario in detail.
So, now you have started looking at homes. What are the things you should concentrate upon? Yes, of course, analyzing the house is important. But, you should not stop with that alone. You must be able to analyze how much you can afford and how much you can afford to lose in a deal.
Next part of your learning process would be related to your home’s value. By now, you would have understood that the home renovation would play an important role in a house flipping business and it’s this renovation that is going to increase the profits earned. Keeping this in mind, you must learn which home improvements would increase a house’s value. Concentrate on these steps first. In general, the home improvements that are known to increase the home’s value are:
§ Kitchen appliances upgrade
§ Exteriors repainting
§ Additional closet storage space installation
§ Deck upgrade
§ Green energy technologies installation
It’s not only important to learn about the home improvement steps that could increase your house’s value but also it’s equally important to know about the home improvements that do not increase the value. You must learn those as well and try to avoid incorporating them in your renovation process. Examples of such things include:
§ Pool installation
§ Whirlpool bath installation
§ Sunroom addition
Getting the Right Help:
If you know someone who is very successful in the house flipping business, ask him/her to guide you in the process. In this, sometimes, you might be required to offer him/her an incentive for the purpose of guiding you. There is nothing wrong in this. In exchange of their hard-earned knowledge and education, you can consider offering a percentage of your profit. This way, both you and your guide will be mutually benefitted. In this, remember that if you are interested to offer a small amount of your profit for the professional help you get, you will be in a position to approach the experts in house flipping even if you don’t know them personally.
Start the Research Process:
So, now you are all set for the house flipping business. What next? You must start looking for homes by taking a look at the listings and foreclosures. There are several websites out there wherein you could find these. Once you have found the home for buying, you must check out the house’s background data. There is a website called “BuildFax” wherein, you can get comprehensive background information about the property for just $39. With this report in hands, you will be in a better position to learn about the history of the particular home including any repair, remodeling, and/or additions that have been done. This is the best way to save your money because you will get an idea about how much money you would need for renovation.
It’s also very important for you to learn how to spot a fair deal. Doing a research about the aspects of landscaping, plumbing, electrician rates, costs for re-carpeting, and other things is essential. Getting to know about these details would make it easier for you to get the best possible deal.
Negotiate and Make an Offer:
Remember, negotiation is an important step when it comes to a real estate business. Therefore, it’s important for you to learn how to negotiate. In this, you must keep in mind, the lesser the money you invest into your house, the more money you are going to earn from the house flipping. Learn from the experts, how to carry out an effective negotiation with the contractors and other workers.
If everything is fine, you need to make an offer. If it’s a pretty good home that is available for a low price, Paloma Palm Beach then you might have a good amount of competition. There are several full-time house flippers in the city at present and they would definitely know about this house too. You can try going door-to-door for making offers in order to sneak in the competition.
Another thing to be noted before making an offer is that you must ensure that the uppermost price you can afford to pay for the house can still be able to make a profit. Therefore, whenever you estimate the investment costs, you must include the estimates for repair, interest rates, as well as taxes. You can pad your estimate by up to 20% and check if the homeowner or your bank is willing to sell for that price. If not, then you should think to walk away from the deal. We would say it’s better to keep searching than to lose your profit in a bad deal.
Home Improvement Works:
After the buying deal is completed, you must immediately start studying the home improvement needs of your home. As mentioned earlier, you must know which home improvements are essential and which ones are not. By discussing with the renovation contractors, decide upon which home improvements can be quickly completed. In this, you should remember that permits are needed for your remodeling works. If you are having the appropriate permit or are not properly displaying it, you may have to face some serious consequences. These consequences would delay the process of renovation and also would cost you some money through fine. Therefore, it’s important that you apply for proper permits as soon as you finalize the deal.
Relisting and Reselling your house:
Several house flippers would list their house with the realtors. Yes, it’s actually a good way to take forward your house flipping business as the realtors are the people who are into the business day and night and they would have access to the buyers all the time. They can take your reselling business forward by listing your property in the MLS database. You will not have to worry about the market rates as these professionals would be aware of the ongoing market fluctuations. They would also possess the skills, as well as network to get the best price for the home quickly.
However, we won’t say it’s a bad idea to sell the house by yourself without getting the help of a realtor. It’s also a good idea and it would be more profitable in the sense that you need not pay the realtor fees. In order to be successful in the process, all you need to do is to network extensively. You need to position yourself to have a talk with the potential buyers even before you start looking for the house for flipping. Take all the possible efforts to build the relationship with your potential buyers. Remember, if you have buyers waiting for your home during your purchase, then it means that your house will sell quickly.
To sell quickly is important when it comes to flipping a house because real estate is an uncertain market and you might end up waiting for a long time to sell the house. Also, listing and showing your house would take some time. If you choose to carry out the reselling process by yourself, then you must be available every time to show the house to the potential buyers wanting to see the house. In some cases, you will also need to conduct open houses. If you are very sure that you can manage all these without the help of realtors, then you can go for it. The choice is always yours!
In simple terms, we can say that, in a house flipping process, with great risks come great rewards!