There are several types of real estate investing, each has its own characteristics, complexity, risk level and of course ability to profit or rewards. One of the most popular and perhaps more people have earned tons of money is through house flipping. No need to worry for this type of investment does not literally turn your house upside down. House flipping is a common type of real estate investment in which the investor buys a house or houses and then sells them to earn a profit. Take note that the time to resell the house is what makes it a flip.
If you’re a first timer in this field, there are actions that lead to house flipping mistakes that commonly done by beginners. Sibei Mi of LendingHome wrote these most common mistakes that first-timers commit in house flipping.
Flipping Houses for Beginners: 6 Mistakes to Avoid
There is plenty that could go wrong here for inexperienced or new house flippers. Start off on the right foot by avoiding these common six house flipping mistakes.
Experienced house flippers know that flipping a home is not just a hobby. It’s a real business, and it should be treated as such. House flippers buy homes that most homebuyers aren’t able or willing to renovate, and improve them to the point where there is buyer demand.
As you can imagine, there is plenty that could go wrong here for inexperienced or new house flippers. That doesn’t mean you can’t make real estate investing work for you. Start off on the right foot by avoiding these common six house flipping mistakes:
1) Not having enough money
Stick with your proposed budget. The number one mistake investors make when flipping a home is not having enough money, which is an important step covered in our beginners guide to flipping houses. Before getting started, you should fully understand how much it costs to flip a house and confirm that you have the money to cover both hard and soft costs for the project. Simply put, your return on investment depends on accurate budgeting and cost planning, which helps you drive toward a successful project.
2) Failing to write a business plan
You would not start a bakery down the street without a business plan, so why would you make a large real estate investment without writing one? Drafting a strategic business plan before diving in, also helps investors understand their risk, reward, and ROI after the house is flipped and sold.
Time is money, especially when flipping a house. A strategic business plan not only helps real estate investors estimate the timeline and the potential costs, but also helps them understand the risks, rewards and ROI of the project. The longer the house flipping project takes, the more you’ll pay in carrying costs, such as utilities, financing, and property taxes. A solid business plan (in addition to your budget) helps you pinpoint these costs and gives you a step by step overview of the entire project.
3) Forgetting to purchase property insurance
Not buying property insurance before undertaking any property investing project is a rookie mistake. Property insurance reimburses homeowners and reduces risk for house flipping projects, if and when damages occur on their property, such as those caused by theft, flood, or a fire.
If flipping a home is all about getting a return on your initial investment, then you’ll want to do everything you can to protect what you’ve put into the project. Investors can either purchase property insurance coverage locally or online, but it’s wise to shop around as premiums can vary. Click here to read the rest of this post…
In your first few months as a house flipper, it is always much better to avoid these mistakes, more importantly, the failure to write a business plan, buying property insurance, among others. It is also recommended that you must have extra cash to cushion you in case you went way above your house flipping budget. Newbies normally overestimate the house price, having extra cash at your disposal helps a lot.
If you’re looking to find the best sale price on a house flip, then this article written by Lee Wallender of The Spruce can help you in finding the best house flipping deals.
Contractor Tips for Getting the Best Sale Price on a House Flip
After the house-flipping circus of the 2000s, real estate investors today face a different environment for quickly buying and selling homes for a profit. The mortgage loan approval process has thankfully become more responsible, and unqualified buyers are less likely to be taken advantage of by unscrupulous sellers and lenders. Additionally, housing prices have settled into more predictable and sustainable increases.
All this means that investors seeking to flip a property today will likely need to invest in some kind of remodeling or improvement to the home in order to make it competitive in the market. With that in mind, there are 10 tips that are most likely to maximize your profits when buying and selling a home.
Work With Familiar Contractors
It is a rule of thumb in the building trades that contractors offer deals for a large volume of work. If you flip homes regularly, the carpenters, electricians, plumbers, and other contractors can grow familiar with your needs and budgets and can work with you when your budget is tight. Further, working regularly with the same contractors can help ensure that the quality of work is good. This strategy works best if you are an established flipper with a track record, but even newcomers to house flipping can establish new relationships with good contractors if they present themselves as honest business people.
Time is money in the house flipping business. Profitable house flipping requires turning the property over quickly—preferably in a matter of a few weeks or at most a few months of purchasing it. Most investors aren’t in a position to tie up money on more than one property at a time, and you cannot fund the next purchase and fix-up until you sell the current property.
Focus on Kitchens and Bathrooms
Kitchens and bathrooms are the two areas where most prospective buyers focus their attention. Virtually all buyers go immediately to the kitchen when the lockbox opens and the real estate agent begins the showing. Next stop: the bathrooms. If you choose only two spaces to remodel in a home, chose the kitchen and the master bathroom. See full post here…
In house flipping, it is crucial to find the best price for homes all of the time. This is the key to making a profit in house flipping. Aside from low prices, a house that only needs minor repairs is also a good deal since you save a lot of money from repair and renovation cost. Also, the house must move quickly like a week or a month after purchase.
Now that you basically have the ideas what mistakes to avoid, and how to spot good deals to house flip, it is time to close your first deal on your house flipping career. To get started, check out this article written by JD Esajian in FortuneBuilders on your way to close your first house flipping deal.
4 House Flipping Tips: Steps To Close Your First Deal
One of the most common questions among new real estate investors is how can they close their first rehab deal. While the process of flipping houses is pretty straightforward, getting to the finish line is often more difficult than anticipated. Regardless of if you are looking to close your first rehab deal or grow your real estate business, there are a few basic steps you need to follow. How well you understand and execute these steps will go a long way in determining the profitability of your project.
Here are 4 house flipping tips to help you acquire your first rehab property:
1. Find deals. You can have everything else ready to go but if you don’t have deals to work on you won’t get very far. Like any other business real estate investing is a numbers game. The greater number of properties you look at the better the chance that you will find one that fits with what you are looking for. You may have to look at a dozen different properties to find one that you will make an offer on. It is important to stay disciplined and wait for the right property to come your way. To find deals you need to have as many different sources as possible.
2. Cost of repair estimate. The first thing you need to do once you find a property you see value in is to estimate the cost of repairs. Rehab deals only make sense if you can acquire them at a discount. To get the deepest discounts the property often will require plenty of work. You need to get an idea of how much capital you will put into the property as you run your numbers. To do this you need to take your time and evaluate every square inch of the property. An oversight on the foundation or the plumbing could lead to thousands of dollars in repairs that will impact your bottom line. Read the rest of the post here…
With the right mindset, skills, and timing, it is only a matter of time you can make a huge profit from flipping houses. It is not dubbed as one of the most profitable investment types for no reason. As long as you do your homework, check the house for possible repairs, estimate the repair cost, you’re in good hands.
If you’re excited to start house flipping, but you need to raise capital, your properties can be a good source. We at Dependable Homebuyers can help you sell your house fast for you to get the capital that you need. Visit our website https://www.dependablehomebuyers.com for more information.