If you turn to HGTV, you will likely come across shows where real estate investors take homes that are eyesores and turn them into jaw-dropping residencies. They also manage to turn a profit after so many renovations.
Welcome to the world of house flipping at Institute. Let’s be real, It’s not as easy as it looks on your TV screens. Here’s a precise course on what it takes to become a house flipper.
House flipping is when a person buys a property and holds onto it for some time and then sells it in the hopes of making a profit. Instead of buying a home, you are buying a home as a real estate investment.
Sometimes, flipping a house means the impermanent owner has to make a lot of renovations and repairs, and other times it is owning the property until you sell it for a some-more than you paid for it, including whatever amount you put in to fix it up. The goal is to buy low but definitely sell high.
Advantages and Disadvantages of flipping a house
No doubt, house flipping is a great business but obviously, everything has some pros and cons. Therefore, at dg institute, we are going to present the brief pros and cons of the flipping house.
Could make handsome profit in certain markets. In the second quarter of 2019, a typical house-flipping profit was around $62,800 as per the report from ATTOM Data Solutions. A real estate agent can help you research price-growth projections for finding homes and neighborhoods that will give you the best ROI.
Part time or new full-time job. You can earn as little or as much as you want, depending on how much flips you take on. You can either make it your part-time job or even a full-time job.
Help improve neighborhood values. Flipping homes can help turn around home values in areas where troubled properties are eyesores and dragging down prices.
Financial risk. The uncertainty in house flipping can sometimes lead to financial loss, as well as a toll on your well-being. It can be emotionally draining if you do not have a proper mindset, strategy, and team.
Homes might have significant issues. Oftentimes, home flippers have to drain a good amount of money in fixing and renovating the homes they buy so they can flip them later for a profit.
Potential for legal issues. If you buy a home that does not have a clear title or sell it and it has issues that you did not properly address or fixed, there’s always the potential for lawsuits.
The house might not sell quickly. If the property that you are trying to flip sits on the market then you are responsible for paying all of its costs including security fee, mortgage, etc. Also the maintenance and society dues too.
Get started with house flipping!
Since house flipping is not something you can plan and start overnight, you need to make sure you have your finances and the right properties in mind first.
Set a budget. For starting house flipping, you need to have a proper budget for it and some extra amount for backup. Using materials like aluminium plates for roofing or carports, for example, can be a cost-efficient way to improve the value and functionality of your property
Find the right property. If you don’t have a huge budget, look for properties that best fit your current finances
Make an offer. You can make an offer with your financing in line and the right property to take on. Work with an agent so he can help you stay in line with your budget
Set a timeline. Not all property renovations need the same amount of money, which means they do not require the same time, either. Whether it is one month or even six, give yourself some time to make the repairs and upgrades.
Hire trusted contractors. Unless you got the chops to handle repairs and renovations yourself, you’ll want to hire trust able people to do the vital work. You can have a team of contractors if you have enough budget.
Sell your property. After the updates that have been made, now it’s the time to put your property up for sale. You can contact a real estate agent to help you out is selling your property.
Common house-flipping mistakes
Here are some common mistakes that you need to avoid in house flipping
- Not having enough money.
- Thinking it’s easy but actually it is not.
- Not having the right team.
- Trying to do it as a side hustle in the long term.