House flipping is the process of purchasing foreclosed or desirably priced property with the intention of selling it at a higher price within a short period. Today, house flipping has not only became lucrative but a common practice, attracting the attention of many entrepreneurs. For investors who are not afraid of work, flipping a house is an exciting opportunity. Though it involves a lot of work and dedication, you can for sure earn a hefty amount of money over a short period.
What are the steps needed to start flipping houses in today’s market?
Here are the steps to make sure you understand how to flip houses before investing and after that be successful in your business.
1. Set a budget and a clear business plan.
As entrepreneurs, real estate investors need to have a clear business plan. The business plan has to include important details like the objective of the project, the timeline, and the budget. It is very relevant to know how much money you will invest in a project. Regarding scope, it is recommended that you start with cosmetic updates for the first two house flips. Additionally, if you avoid structural problems like the plague, the margin will be much smaller, but the project will be faster. Therefore it will cost you less money.
2. Hire trusted house flipping professionals.
House flipping professional include:
● Accountant. He or she will help and assist you in setting up a business structure and will let you know which items are allowed to be written off.
● Attorney. Here you need to choose an attorney who mainly specializes in real estate sector. A qualified one will always make sure that your business is in line with the local regulations.
● Contractor. If you don’t hire a contractor, you will have to oversee the project for yourself. The project will be deemed with errors which will reduce your profit.
● Architect. You will only need them if you are changing the house structure. Consider using architect if you don’t want to compromise your structural integrity.
While hiring the above professionals, always get referrals from the most trusted sources.
3. Look for financial sources.
You can use the following ways to finance your flipping business.
● Rehab loans. They include home equity lines of credit
● Investment group loans. If you have experience in the real estate sector, you will meet other investors who will be willing to help you with some cash.
4. Identify the right property to fix and flip.
Once you have all the other needs, it is time to identify the right properties to fix and flip for a profit.
What are the things you need to be careful about before house flipping?
● Location of the houses. If the location of the house is not good, you will probably make less money on your flip. Buyers are attracted by that home which is proxy to social amenities like schools and hospitals.
● Professionals’ skills. You should be very careful about the professionals you hire to work on your project. Some workers may turn to be a disappointment.
● Building permits. Though a little-licensed construction might not seem like a big deal, it may turn into a problem when selling the property.
Having a knowledge of what to avoid will make your project become a reality within your timeline.