Have you ever wondered how people flip houses to gain huge profits? You’re not the only one! Many people have flipped houses, with the industry rising across the USA. There were almost 246,000 houses flipped back in 2019, which is over 6% of home sales. If you’re not getting the hype, watch a house-flipping episode and you’ll see why it’s an appealing activity.
That said, this isn’t as easy as you see on television. But what does house flipping entail and how can you do it? Here is an informative guide to learn all about it!
What is House Flipping?
House flipping refers to when real estate investors purchase a house then sell it for profit. To consider it to be a flip, the house should be bought with an intention to resell it quickly, which is either a few months to a year.
There are two types of house flopping, which are:
- Investors purchase a property with the potential to increase its value with repairs and a bit of renovation. After doing the work, they will earn a profit after selling the house for a higher price compared to its original one.
- Investors purchase a property from a market that has home values rising quickly. No updates are required, and they would simply hold the house for a certain time before reselling at a higher price for profit.
Flipping Houses for Profit Essential Guide
Again, flipping houses is not a simple activity, because some things can either make or break your investment. It can be from costly unknown damages that drive up expenses or an unexpected dip in the market value. This may cost investors thousands!
That said, if you do decide to flip a house, you need to do it the right way. Here are the tips to follow when flipping a house:
1. Set a budget
Don’t wait until after investing in a house to set a budget. You need to know your price range and overall budget when purchasing a house, including the repairs, renovation expenses, and selling costs.
List down cosmetic projects and pricey overhauls you will need to do with a house. For those who don’t have a background in construction, you can have companies like Onsite Timber Supplies to do the inspections and let you know what needs to be fixed, the materials required, and how much it costs in total.
2. Invest in Smart Renovations
You probably want to give the investment property the ultimate upgrade by having trending light fixtures, professional-grade stoves, and even shiny hardwood floors installed.
Well, this dream may end up getting out of hand and ramping up the overall budget. That’s why it’s crucial to have a budget and ensure that the expenses of updates you make stay on track. The updates you make should also increase the home value rather than make it just for show.
3. Know the Market
House flippers feel ecstatic about the upcoming projects that they would skip the less fabulous side of this business. If ever you’re not familiar with the market and real estate trends of your local areas, you may end up experiencing these issues:
- You won’t know if you’re getting a great deal on the investment property
- You won’t know the home’s potential value
- You won’t know how to price the house when it’s ready to be sold
Make sure you know the market to get an idea of how much properties should be when it’s a good deal, and how much to sell them in the future. You can learn all of this through a real estate agent that has years of experience in the area.
4. Find the right property
For those who don’t have a huge budget, then you should focus on finding properties that would fit your current budget. You can do this by looking for auctions, foreclosures, or short sales, seeing those that can match your budget and renovation abilities.
Like the tip above, don’t hesitate to ask an experienced real estate agent about any opportunities and house sales that suit your budget.
5. Find suppliers and contractors
When you now have a legally established business, the next job is to look for proper contractors and suppliers for the business to get going. Even if you may be a contractor yourself or have knowledge in the industry, it’s best to have additional contractors and the right suppliers to help complete your projects excellently.
Make sure that you hire contractors that have portfolios of demonstrable past projects, references, along with positive reviews from past clients. Trusted contractors and suppliers will make sure that all remodeling plans and budget projections are taken into account, in terms of cost and timeliness.
6. Assemble a team
Regardless of whether you want to go solo, have a partner, or hire outside contractors, you will need a team of qualified professionals to complete a house flipping project successfully. You may want to source for those roles to help maintain organization and ensure that the project is going smoothly and as planned.
Wrapping It Up
Do make sure you follow these tips to have a higher chance of success and gain profit from flipping houses. Good luck and I hope that this article helped you out for the long term!
If you have questions or want to share your tips and experiences with flipping houses, share them in the comments section below. All of your comments will be appreciated.