What Is House Flipping: House flipping is basically buying, renovating, and selling a property for earning profit. In this process, house flippers buy a house and for a short time, they hold onto it for upgrading and to make the renovations. Once the renovation is done, they sell their property in order to make some good profit from it.
House Flipping is becoming popular these days and you might have also seen it in several reality TV shows. You can start flipping your house as a side business and can still earn a decent amount of money per flip. So, if you have the skill, then go for it, but it doesn’t mean a beginner can’t start it. A beginner can also make a good profit even at the time of learning if he/she gets proper guidance. Here is some important information about House Flipping that a beginner should definitely know.
What Is House Flipping?
House Flipping Means when someone Buys a Property and Holds onto It for a Short Period of Time and after that, they Sells It for Making Profit. Instead of Buying the House to Live in, You are Buying the House for the Real Estate Investment. Many Cases, House Flipping Means the Temporary Owner needs to Make a Lot of Improvements and Renovations and Other Times It is Owning the Property until You can Sell it for More than You Paid for it. The Goal is to Buy Low and Sell High, Invest Your own sweat equity to cut Costs, and Earn a Profit in a Relatively Short Amount of Time.
Why should I Opt for House Flipping?
In some markets, House Flipping definitely makes a decent profit. On average, you can earn somewhere between $40,000 and $50,000 each flip. However, the profit might increase based on the market and your skills.
You can also practice House Flipping as a secondary income source, but this makes you earn less as compared to the full-time as your profit depends on the number of per flip you take on. However, if you have the skill from the beginning or you have experienced this field for quite a long then you can join it full-time to earn more profit.
Flipping Homes also helps in improving the value of the neighboring areas which is currently down for a while.
What Are The Factors You Must Consider While Flipping A House?
There are many benefits of flipping a house, but being a form of business it definitely includes some risks as well. If you are a beginner and trying to opt for house flipping, then here is the list of pros and cons that you should be aware of in the beginning.
- When it comes to house flipping, there is always some percent of uncertainty involved in this kind of business. If the market is down or your property is taking much time to sell then you might face possible financial loss.
- Sometimes, you don’t know about the serious issues that your property might have unless until the renovation work starts. This will lead to high-cost renovation and it will also consume a lot of time, thus resulting in less profit or substantial loss.
- Homes with certain kinds of concerns that you can’t fix with your renovation such as address issues, may possibly to potential lawsuits.
House Flipping: How to Get Started?
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Research Real Estate Market
It is very important not only for Real Estate but for any business to learn about their local market. You should be aware of the demand and what people need at the very moment. Good research will give you all the answers that you need in the initial stage of House Flipping. If you know the market, then you can sell the house very fast.
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Set your Budget & Finance Plan
The second step also involves research in order to find the suitable property that can come into your budget. If you have a good budget or great financing plan then this step will be easy for you. But, if you don’t have enough budget for buying a house, then you will surely face difficulties to reconstruct and re-selling it (particularly with no home financing options). Therefore, know your budget, and then make a plan accordingly. You can also take help from an experienced real estate agent or can make your own research by visiting or browsing auctions, short sales, etc. to choose the best option according to your budget plan.
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Negotiate and Make a Good Offer
If you know negotiating strategies then you might end up earning more profit than the others who will pay more just for buying a house. The less you will pay, the more money you are going to make. So make sure to negotiate even if you are able to deduct few bucks, it will be very useful for you in the future as you will make more money in the end. Also, the investors must take note that you should not pay more than 70 percent of the after repair value (ARV) minus the repairing need cost. In this way, you will not overpay for any property if you follow this rule.
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Purchase The House and Set A Timeframe
Once you are done with research and are getting a good deal on a property under your budget then you must go for it. After you buy a house, it is not necessary to start the renovations straight away because all the properties are not the same. First, make sure to come up with a plan and then set a timeline for the same whether it’s two months or 6 months. Initially start with inspecting the building, making the list of repairs and upgrades in the property, and then based on these factors set a timeframe.
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Hiring Trustworthy Contractors & Start Renovation
You can only complete the renovation and upgrade process in your pre-set time if your contractor is trustworthy. No matter how much hard work you are putting in, if your contractor is not right you may face several issues which will imbalance your budget plan in the future. Only go for the licensed contractors who have to fill a team and are experienced in such kind of work. You can go through their previous work in order to get their work-related background check. If your contractors are skilled and experienced ones, your budget will not overflow and the work will be done on time.
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It’s Time To Sell The House
After you have upgraded the house, it is time to put your house on sale. Make a list of the buyers or simply you can put it on the database of Multiple Listing Service (MLS). Try to analyze fluctuations in the market on the present date and spread your network to grab the attention of many buyers. If you are very new to this form of business then you can also hire an agent who will surely provide you, potential buyers, as he/she knows their needs and the present market very well.
Conclusion
House Flipping in simple words means that you are making a real estate investment where you buy a house not to live in, but for reselling it at profitable rates. This was a simple guide for new house flippers; hope this information is going to help you in the future.