There's a lot more to consider when it comes to flipping a house besides money. Here are 5 simple tips that can be helpful to beginner flippers.
1. Assess Your Finance Situation:
In order to flip a house you will need cash to make it happen. The money can come from you, a bank or another investor. Before fishing for investors start by assessing what you already have to work with. The next decission will be to find a house to flip, this way you will have an idea as to how much you will need to fund the purchase. A smart way of starting this investment is to have a partner willing to invest in this project, at least if you have to split the profits with your partner 50-50 its better then 100% of nothing.
2. Build a Team:
This is not a job that you can do alone. You have to look for reliable people that can assist with your investment. You need experienced specialists that can provide their expertise to secure maximum profits. You will need experts such as real estate agents, real estate attorney, a CPA, a general contractor,a designer or architect, an insurance agent, a wholesaler and a private money or hard money lender. Once you have build your team of experts, they are to assist you in the details of finding, fixing and selling the property, they are also to assist with locking the profits and keeping you out of trouble as well.
3. Find an Undervalued Property:
One of the benefits of having a real estate agent/agents working with you is because they have the resources to help find an undervalued property that can be a valuable profit to you. Their are other ways of finding what you looking for, such as asking friends and neighbors if they know someone that is interested in selling their house. The email market is a huge market can be used as a source of resource as well, and contacting abandoned property owners from town record data as well.
4. Do the Math:
Basic mathamatics is always essential when making a profit. The most important number that needs to be remembered is "The After Repair Value". This value is important and essential because this is the value that the house will ulitimately sell for. The "Maximum Allowable Offer," is the highest allowable price you will pay for the property. Once you have both these figures, take the ARV and multiply by 70%. Then deduct your cost for renovation which blends with the MAO. The 70% was designed to keep you profit at a maximum and your downside risk a minimum.
Ex: The ARV was $300,000. Multiply $300,000 by 70% and it gives $210,000 and subtract $75,000 (cost of repairs) and the most you should pay for your property is $135,000. (This is just an example)
5.Speed Equal Profit:
Time is definitely crucial when flipping a house. The lest time you hold on to the investor's money the higher you profits will be. The tidious things such as financing payments, insurance payments, town taxes, utilities and any other carrying costs start to add up. The more they add up the less money you make. The real money is in knowing the basic math and what it takes to flip a house. Once you have the blue print on how this works, it becomes an easy and profitable business.
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