Flipping houses has become somewhat of a popular money-making scheme in recent years, Thanks in part to the rise of reality tv shows showing the more glamorous side of home renovations and parties due to more people turning to alternative methods of generating additional income streams. This phenomenon shows no signs of stopping, and for those wishing they can get on board with flipping houses in their local area further afield, this post looks at what you need to do to get going.
Research the local area.
Research is king, as they say, and the property market is no different. Rushing into things in excitement can lead to disastrous results; instead, take your time and learn as much as you can. Find out what properties are for sale and the average house prices for what you have in mind for return on your investment. Identify what will and won't be a good investment and how much you can expect to make on a house once you have flipped it.
You need to make the numbers and ensure you have calculated everything into your price. Know the max ceiling for the home you are interested in, how much you will be paying, how much you will need to bring it up to spec, and any fees, taxes, and additional costs to ensure you turn a profit. While the housing bubble shows no signs of bursting, knowing how much you can get for a property can help you work out the numbers and make financially sound choices.
Set your budget
Sticking to a budget can be tricky as a first-time property developer, especially if you have never done anything like this before or know their industry. Lots of information can make up the after-repair value of a home, including the neighborhood, transport links, the size of the house, the build type, finishes, and fittings, and if the home is on a main road, to name a few. A general rule is that you should never pay more than 70% of the after-repair value of a home.
Secure your funding
Getting funding for flipping isn't the same as getting a regular mortgage, although you will need impeccable finances for the best rates. While the traditional methods of finding a home purchase are options for you, you can also consider options such as self-funding if you have cash in the bank, a personal loan, or working with Hard Money Lenders to get the funds you need fast to close on a deal. Remember you will be paying interest on any money borrowed for flipping, so you know all the terms of your financing agreement before signing on the dotted line.
Find the right team.
Finally, you cannot do this alone. You need a good support system and a team of professionals to help you, even if you plan on doing much of the work yourself. Unless you are skilled in construction, electrical work, and plumbing and gas services, you might need to call the professionals to help you with specific jobs to ensure everything is safe and up to code. You will also need a realtor who is experienced in flipping houses, as they can give you a deeper insight into the area for this in your area, and here you need to focus on making a profit once you're done.
Conclusion
While flipping houses is extremely popular right now and a viable way of making an income, it can be a financial disaster if you don't know what you are doing. By doing your research and knowing what you are getting into, you can make better decisions for maximum success come the time to sell it on and start again.
