Flipping houses, for some, is a great way to make money. But you have to know what you’re doing. By that, I mean, you don’t want to overextend yourself financially or make other rookie mistakes. If done right, realtytimes.com says you can end up with a profit of at least $30,000 for a couple of months but $100,000+ is not out of the question. But the website says before throwing down cash for your own flip, you should think about a few things.
1 - Do you have the money?
It might seem like a ridiculous question, but many who are new to the house flipping business don’t always know the financial stakes involved. "The first expense is the property acquisition cost. While low/no money down financing claims abound, finding these deals from a legitimate vendor is easier said than done. Also, if you're financing the acquisition, that means you're paying interest," said Investopedia. "Every dollar spent on interest adds to the amount you will need to earn on the sale just to break even."
Obviously, if you're planning to pay cash, you won't have to worry about interest, but you will still have carrying costs such as utilities, property taxes, and HOA fees where applicable.
auction.com says if you’re coming up short on cash to purchase one of the homes, you can always get a home equity line of Credit. These are low-interest, variable-rate lines of credit that are secured by either your primary residence or an investment property.
2 - Location, location, location
Buy a house, you plan to flip, in the best location you can in a desirable neighborhood or city but also one that’s in close proximity to where you live. That’s because if you live too far away, it’s not going to be convenient to go over there regularly to work on fixing it up. As a result, you’ll end up spending more money on gas and it’ll take longer to fix up the house.
3 - Work with a Realtor and Check the Comps
If you know what you’re doing, you might be able to get by without hiring a realtor. But flipping a home yourself rarely works, financially, if you don’t know what you’re doing. A realtor’s commission can be well worth the money, knowing that all the paperwork will get done correctly.
Real Estate agents can also be helpful in finding great deals, connecting you with lenders, not to mention getting you comps. Knowing the prices in the neighborhood is important, so you can in turn, make smart decisions on buying and fixing up a house and eventually selling it. In some states like Texas, home sales are not public record.
4 - Make Smart Updates
How to spend your money is important to a successful flip. You’ll want to focus on areas that, obviously, increase the value of a house such as upgrading kitchen appliances, repainting the outside of the house, and installing more storage space. Home improvements like installing a pool or a sunroom will not increase the value. Knowing the best home improvement projects is another reason to use a Real Estate agent.
5 - Finding the Right People
Hiring good contractors is the key to being successful at flipping homes. If you’re able to do most of the work yourself, all the more better since that’s more money in your pocket.
7. Work with good people
Hire good contractors is the key to flipping homes. Hire and partner with those you can trust. But if you’re able to do most of the work yourself, you’ll be able to keep more of the profit.
If you or anyone you know is interested Scottsdale Real Estate, please check out my website, www.Realestateforsaleinaz.com, and I’ll be happy to help.
Comments (2)Subscribe to CommentsComment