Investing in real estate is among the most popular types of investment in which people are putting their money to earn a profit for several reasons. With real estate investing, the risk is very low risk, but the returns are very high since most of the time real estate’s value appreciates. Among the most popular real estate investment is house flipping. It is gone popularity over the years since the real estate market is booming and the earning potential skyrockets.
Flipping houses is not as easy some people have thought of it. As a matter of fact, one wrong move could actually burn your money if you made a bad decision about the house you just purchased. With knowledge and skills, you can easily avoid making rookie mistakes. Check out this awesome advice by Lucas Miller in My Millenial Guide on how to do house flipping for the first time.
7 Awesome Tips for First-Time ‘Home Flippers’
These days, almost everyone has a side hustle.
Whether you just want to make some extra cash in addition to your full-time job or plan on becoming a solo entrepreneur, starting your own side hustle is a great way to create new opportunities. And few side hustles offer a greater chance for financial growth than home flipping.
While there’s no denying that home flipping can turn into an extremely lucrative business (with many doubling their initial investment), this side hustle also carries a bit of risk. So what can you do to ensure that your home flipping efforts actually generate a profit? These seven tips will help you get on the right track:
1) Look for Motivated Sellers
Foreclosures and short sales offer great opportunities to buy a home for cash rather than compete with the open market, but these aren’t the only situations where you can find motivated sellers. Couples who are getting a divorce or expecting a baby, as well as owners of homes that are in disrepair are often willing to sell fast.
Finding motivated sellers can help you close quickly on a potential investment property and reduce your initial expenses.
2) Don’t Do Everything Yourself
When trying to maximize your profits, it can be tempting to try to DIY any repairs and upgrades the property needs. Experienced flippers will warn you that this is rarely a good idea. Sure, DIYing can save you money, but it’s essential to consider how long the job will take and if you can achieve professional-level results on your own.
Instead, be realistic about what you can and can’t handle. While painting and tiling can be done on your own, you should almost always leave larger projects like wall additions and plumbing work to the pros. Shoddy work could result in lost time and even cause you to fail a home inspection.
3) Location, Location, Location
A beautifully renovated house is one thing, but if it is located in an undesirable neighborhood, you’ll probably have a hard time flipping it. First-time house flippers would be wise to carefully consider the area where they’re buying—not just the condition of the house.
In general, it’s a much better idea to buy and fix a dilapidated house on an up-and-coming street rather than buy the best-looking house in a troubled neighborhood. Buyers will look at street conditions and the reputation of the neighborhood before making a purchasing decision. So should you.
4) Know Current Trends
To get the most bang for your buck, it pays to invest in the trends that are popular right now. From hardwood floors to tankless water heaters, investing in design trends that are gaining popularity will make it that much easier to increase your asking price and sell the property quickly.
The kitchen and bathrooms should always be a primary area of focus during renovation work. Even simple updates to these rooms can give you a significant return on investment. See full post here…
For first-time house flippers, it is very important to study the current market trends, not only in the real estate market but also house design trends such as the trending home interiors etc. Location is also a key factor, as well as motivated home sellers. While first-timers are a bit shaky when it comes to making decisions, those who have been into house flipping for so many years already have a solid foundation, just like Justin Williams and his four fundamental pillars of flipping houses written at House Flipping HQ.
Flipping Houses 101: The Four Fundamental Pillars of Flipping Houses
What is flipping houses?So, just to make sure we’re on the same page, let’s start with the very basics. In fact, let’s make sure we understand the definition of “house flipping”.
Essentially “house flipping” or “flipping houses” is a term that means you are buying a house and then turning around and selling it for a profit.
Now, of course it isn’t as simple as that. Normally you spend some time and money (or someone else’s time and money) fixing things up (or “rehabbing”) the home. This isn’t always the case, but usually it is. This process of fixing up the home is how you add value to the home.
But I’m getting ahead of myself. Let’s talk about what I refer to as The Four Pillars of House Flipping. These are the four basic parts of the house flipping process from beginning to end. When putting together a house flipping business you can see each of these as separate “departments” in your organization. By breaking your business down in to these areas it will make the learning process less overwhelming and allow you to focus on one aspect at a time while studying these fundamentals.
Each of these Four Pillars can take days or weeks (or months?) to discuss on their own, but for now we will just give you a quick overview so you have a basic understanding of how it all works, and then we will dive in to more detail in future posts.
Flipping Houses – Pillar 1: Buying
Knowing how to find, analyze, and buy houses is the single most important skill you can have when it comes to flipping houses! In fact if you become good enough at buying houses it is possible to create a business on this one skill alone! (more on this later.)
Essentially the process of “Buying” can be broken down as well into 4 areas as well.
You will need to figure out and decide…
- Inventory: What kind of houses will you focus on buying?
- Farm Area: Where (what location) will you focus your efforts in looking for these houses?
- Deal Analysis: What will you offer for these Houses?
- Acquisitions or Buying Methods: Which methods will you use to find and acquire these houses?
First off what kind of inventory you are going to focus on? If you are just starting out, your best bet is to focus on a standard house with 3-4 bedrooms and probably anywhere from 1,200-2,000 square feet with a standard “entry level” price range. This is not a hard and fast rule and may change from area to area but key point being you want to buy a house that will be easy for you to sell. So if most of the houses in the area you are buying are about 1,500 sq ft and priced around $200,000 then you probably don’t want to buy a 5,000 sq ft 1,000,000 house or a 1 bed 500 sq ft house as your first investment deal. Click here to read the rest of this post…
Expert real estate investors often developed foundations in house flipping. These foundations are proven to be very effective to them that they decided to use it all the time in finding a house to flip. First-time house flippers may follow these foundations, as well as the secrets of successful house flippers written by Teresa Mears in U.S. News. Read and learn the ultimate secrets to successful house flipping.
9 Secrets of Successful House Flippers
Hint: You need money, and you also need to know what you’re doing.
We’ve all seen the home improvement shows on TV: A personable couple (or few brothers or even cousins) buys a forlorn house, turns it into something beautiful and sells it for a profit, all within a few months.
Reality check: It’s not as easy as it looks. People make money flipping houses every day, but the secrets to success start with really knowing what you’re doing. And finding a good house to flip is much harder now because the market is so strong for bargain-priced homes.
“It is difficult to find a house to flip that makes economic sense,” says Mindy Jensen, community manager at BiggerPockets.com, an information hub and networking platform for real estate investors. “You’re competing with retail buyers. They’re buying the ugly houses because there’s nothing else.”
Brian Peavey’s company, ProfitShare, uses direct mail, door hangers, social media, real estate agents and personal connections to find homes to flip in Boise, Idaho. To make its offer more attractive to sellers, ProfitShare promises an additional payment once the flip has sold.
When his company’s offer is rejected in favor of a higher offer, Peavey puts in a backup offer in case the first deal falls through. “We’ve had multiple houses that we’ve ended up on second position on,” he says, eventually closing the deal.
Don’t believe those late-night infomercials that say you can get into house flipping with no money.
“Nobody is going to hand you a house for free, and you can’t go to Home Depot and they’ll give you your supplies for free,” Jensen says. “If you are using credit cards and have no money, you can get into trouble quickly.”
To get a conventional investor mortgage, you often need at least 25 percent down, though a good mortgage broker might find other options, including a lower down payment or a loan that provides some money for repairs. Hard-money lenders will lend to nearly anybody, but interest rates are high. Borrowing from friends and relatives is another option. “If you get with a very good mortgage broker… they may introduce you to lenders who have some unique programs,” says Steve Udelson, president of online real estate at Altisource, which offers services to consumers, investors and the real estate industry.
Another major key to success as a flipper is accurately estimating both cost and timeline. That doesn’t mean there won’t be surprises, but you want to calculate the true cost of getting the property ready for sale. That includes purchase price, repair costs, marketing expenses and carrying costs, such as mortgage, insurance and utility payments.
When you buy a home, you don’t always know what’s behind the walls: mold, asbestos, water damage, antiquated electrical lines, foundation issues or crumbling plumbing pipes. But, if you understand construction and issues faced by older houses, you can make a more accurate estimate. “When you get into these problems and don’t know what you’re doing, these problems can swallow your profit and put you under in a heartbeat,” Peavey says. Learn more here…
House flipping could be a profitable investment if done right. By following the pillars of the experts and the secrets of those who have been very successful in house flipping, it’s only a matter of time before you start earning a tremendous amount of profit. With the real estate market trend going up, this is the perfect opportunity to reap its benefits.
If you want to sell your house to raise capital and start house flipping but need some expert advice, we at Dependable Homebuyers can help you sell your house fast and find the right buyers for your house. Visit our website https://www.dependablehomebuyers.com to learn more.
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