Top Things to Look Out for When Flipping a Home

 

One of the best ways that you can make a hefty profit is by flipping a home. The term ‘flipping’ refers to the process of buying an asset, like a house or apartment, and re-selling this for a profit. This normally entails purchasing a property for a low or discounted price, fixing it up or renovating it, and then selling it for more than what you initially invested.

 

There is a lot of money to be made in the market of flipping houses, however, it is not as easy as it seems. This process is not for the faint-hearted as it can induce stress and be very time intensive. Not only this but you will need a substantial amount of capital in order to first purchase the home and then renovate it. However, there are ways to get financing for this business venture. You will also need a qualified team of professionals to help you increase this home’s value. Before you go ahead and invest in a property, here are some of the most crucial factors you should consider.

 

Research the Market

 

There are several factors you can look out for when purchasing a property to ensure the best results and profit margins. For example, look for a run-down house in an up-and-coming neighborhood that has low crime rates and great schools. It’s much better to buy the smallest house in the best neighborhood than the largest house in a bad neighborhood.

 

If you create meaningful relationships with local realtors, you can also find great bargains in your local property market. Bank foreclosures are also a great place to find discounted prices and potential fixer-uppers.

 

Set a Budget

 

There’s no point in flipping a home if you aren’t going to make a sizeable return on your investment. The entire process of buying a home, renovating it, and selling it, can be very time-consuming, so you want to make sure it’s worth it.

 

The most common budgeting guideline in house-flipping is the 70% rule. This rule suggests that an investor should be paying a maximum of 70% of the After Repair Value (ARV) minus the repairs that are needed. If the value of the home is $100,000 after repairs, and the repairs cost $25,000 to begin with, the investor shouldn’t be paying more than $45,000 ($70,000 - $25,000) for the property.

 

Look Out for Red Flags

 

When you flip a house, you don’t want to be spending excessive amounts of money on fixing it up. Something like an ant infestation can easily be fixed by an exterminator like nextgen pest solutions pest control company.

 

However, if a home has severe foundational problems this could end up costing you a pretty penny. Make sure to factor any expensive repairs, like mold or water damage, into your budget, but it’s best to avoid these altogether.

 

Gather Your Team

 

If you want to successfully flip a house, you will need a great team of people behind you that can help you succeed. The most important part of your team will be your group of contractors, make sure you find a reliable group that you can trust.

 

A home inspector is another great addition that can help you avoid going over-budget. Lastly, finding a great real estate agent can save you a lot of time and effort. Although they take a commission on sales, they can quickly find houses for you to buy and help you sell your recently renovated properties.

 

Sell for a Profit

 

If you have budgeted correctly and conducted your research about the neighborhood, you should be on the right path to making a profit. A great way to make sure your house sells is to find potential buyers before you begin flipping.

 

If not, find a great realtor to help you sell your home. More ways to help boost your chances of a sale include staging the home beautifully and networking with potential buyers to generate interest.

 

Overall, there are many things that should be considered before making an investment of that size. You don’t want to invest your entire life savings if you aren’t even sure that you will be making a profit. For this reason, research and budgeting are two of the most important steps when flipping a home. You then need to look out for any potential red flags that a property might have. Don’t forget to get a great team behind you and then sell it for the highest profit possible!