How to Effectively Flip Houses for Profit
There are many ways to make money investing in real estate. Aside from the traditional rental route, buying and flipping houses, though considerably risky, is one of the popular ways of making money.
What is House Flipping?
House flipping is when real estate investors purchase properties below market price, increasing its value through renovation, and then reselling it for a quick profit. This is different from development investing, wherein an investor buys a property under development with the intent of selling or renting the unit when it’s ready for occupancy.
In house flipping, you can easily make a lot of money if you play your cards right, i.e., buy a property at a good price, make aesthetic improvements, and sell the property at a higher price than you paid. It is, however, not a “get rich quick” plan. It takes a lot of work, a lot of investment, and perfect timing.
So how do you effectively flip a property for a profit?
Like in any form of investment, it is important to get educated. Understand the ins and outs of your local real estate market. Know how to spot a good deal. Become an expert on home financing options. Analyze how much you can afford and how much you can afford to lose on any deal.
The key to successful house flipping is a good real estate investment. What should you look for in a potential house flip?
- Location. In property investing, the mantra is still “location, location, location.” When you buy a home, it is easy to change its structure, remodel it, or alter its layout, but you can’t move it — at least not easily or inexpensively. Consider properties in close proximity to good schooling facilities and shopping areas, convenient access to local transport hubs, water access, and safe and secure neighborhood.
- Sound Condition. As much as possible, invest in a property that will require only minimal upgrades or innovations. Look for a home that can be substantially improved with the least amount of time and resources.
- Analyze the Kitchen and Bathroom. In a renovation project, the kitchen and bathroom are usually the most expensive to upgrade. Remodeling these areas typically do not raise the value of the home enough because of the high cost associated with these. See to it that the kitchen and bathroom are in good condition.
Have a Timeline
As they say, time is gold. The objective of house flipping is to sell quickly and effectively. Create a realistic timeline and outline times for contracting, renovating, and selling.
Renovate the house
Prioritize the renovations that will quickly increase the value of the home. That way, should the budget becomes bloated or if you become pressed for time, you have completed the major fixes.
Sell the house
Sell the property for a significantly higher price than the purchasing cost. However, be prepared for the possibility that the home won’t sell right away. Be willing to lower the price if no one is biting. Research the prices in the neighborhood, and seek the help of realtors.
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