House flipping can be a fun and lucrative way to make some serious cash. However, when you want to make the most amount of money with each sale, it is important that you know the finer points involved with this unique opportunity. You can bulk up your bank account and reap the profits of your effort by following the tips in this no BS how-to guide to house flipping.
Know the Importance of Credit
Good credit definitely works to your advantage when you are serious about flipping houses for maximum profit. As you make a business plan that will benefit you and your pocketbook, you should first find out what your credit score is and if it is high enough for securing a hard money loan that you might need to buy houses and pay for other house flipping expenses.
A good credit score makes it easier for you to get a loan on a house that you want to buy and also frees up any cash that you have set aside in your budget. You can use your cash to pay for closing costs, Realtor fees, and even a down payment. Good credit gives you more options for finding where to find money for your real estate deals.
That is not to say that you cannot flip houses if you have bad credit. A lower credit score makes securing a bank loan more difficult. Still, you can always use cash or secure a loan that has higher interest rates. High interest financing could require that you sell the house for a higher price, or that you sell it faster to pay off the loan.
Understand the Role of Location
Successful house flipping also demands that you choose homes that are located in areas where people actually want to live. Most home buyers do not want to move into a house that is in a bad neighborhood or in an area with poor schools.
Before you select a house to buy and flip, you should research the location to ensure that it will attract buyers. You ideally want to select some place where home prices are on the rise, job opportunities are plentiful, and the economy shows signs of promise.
These optimistic attributes appeal to buyers who may still be antsy about the recent housing crisis and have put off buying for fear of another recession. Flipping a home in a neighborhood or city where people are able to recognize signs of stability and growth can help you sell the house quickly.
Learn Why Good Conditions Matter
In your bid to find the right property to buy, you should realize the potential that comes with selecting one that is in relatively good condition. A house that must be essentially rebuilt may not be worth your time or effort. Likewise, you may not make the profit you want if the home you are considering is plagued with problems like:
• toxic mold
• faulty wiring
• a leaking or damaged roof
• a cracked foundation
Extensive problems like these are always more costly to fix than you might originally imagine. They also take a substantial amount of time to address so that the house passes an inspection and can be sold for the highest price possible.
Instead, you should look at homes that are in reasonable condition and may need simple yet practical projects done on them. These tasks include:
• painting the inside or outside of the house
• hanging new wallpaper
• laying new flooring like tile or carpet
• putting in new light fixtures
These projects are not too expensive to fit into your house flipping budget. If you are not capable of carrying out this work, you should make sure that you find the right contractor who can get it done at a price you can accommodate without sacrificing profit.
Choose a House Close to You
If you are like most house flippers, your efforts are probably a weekend or side venture while you work a full-time job. When you have to restrict your remodeling and renovation work to the time you have off work, you should choose a house that is close to where you live and work.
A house that is close to you lets you work on it in your spare time without having to spend a lot of time for gas and travel expenses. You can get the projects done faster so that you can put the home up on the market and get it sold for the quickest profit possible. You will not need to take valuable time away from your job or use up your vacation time and sick leave to flip the house.
Focus on the Kitchen
Many home buyers look at the kitchen first when they consider whether or not to buy a house. The kitchen can truly be what makes or breaks your house flipping efforts, which is why it is recommended that you put a significant amount of attention to this room.
You should make the kitchen a showpiece that will impress potential buyers and make them want to buy the house. Putting in new cabinetry, installing new counters, or laying new tile can go a long way in upgrading a ho-hum kitchen into a room that converts curious lookers into eager buyers.
While you should take care to renovate or remodel every room of the home you want to flip, you should give extra care to the kitchen. The kitchen can truly be the selling point that lets you flip the home successfully.
Choose a Home Below Market Value
Another key component to successful house flipping involves buying a home that is below market value. You want a home that will appreciate in value after you fix it up and get it ready for sale. The value after the work you put into the house should be on par with other home prices in the area.
If you buy a house that is overpriced for the neighborhood, you could easily lose all of the money that you put into it. An overpriced home also takes longer to sell and forces you to lower your asking price, costing you money that you cannot afford to sacrifice.
As you consider homes to buy and flip, you should look for those that have been foreclosed on or have been put up for auction. These houses are often sold for much lower than the prices of other homes in the neighborhood and give you the most chance of flipping them to make a handsome profit.
Find a House Flipping Mentor
Learning the ins and out of successful house flipping can be overwhelming if not confusing. When you want to better your chances of success, you would do well to find an experienced house flipper to mentor you.
Of course, most successful house flippers are not willing to divulge their secrets for free. You may need to offer an incentive to your chosen mentor to show him or her that you have the best of intentions and that you do not plan on taking advantage of this person.
You could, for example, offer your mentor a small cut of your first home sale. Pledging to give a small percentage of your profits could be enough of a generous offer that the person agrees to mentor you as you gain a foothold in the house flipping market.
You should also choose a mentor who has no direct ties to you. Someone who has no vested interest in your success and give you objective and factual advice on important topics like the best way to buy a foreclosure or what you can expect for an average profit on flipping a house. You can also ask for input on the process of buying a foreclosed house or how to know if a neighborhood has the promise that buyers want.
After you gain confidence and learn the basics of flipping houses, you can strike out on your own. Until then, you may benefit from the tutelage and counsel of a house flipping mentor.
Buying homes and fixing them up for profit can be a great way to add money to your bank account. Before you attempt this venture, you should consider the important tips in this no BS how-to guide to house flipping. These pointers can better your chances of success and make every house flip profitable.