There is a lot of profit to be made from flipping houses. Just look at the number of television shows out there about house flipping, and you know that there is definitely money to be made. Whether you are buying a low priced house and selling it at a high price, or buying a house that needs repairs, and fixing it up to sell and make a profit. However, in as much as it is a profitable venture, there are also risks involved in this type of investment.
To avoid making a mistake, you have to pick a good place to buy the house. Make sure the house or area the house is in does not have a bad history, you have to have a well-structured and detailed budget, and also, see that the timing is right. Or else, you could end up with an unsellable house.
If you are flipping your first home and will like to know the best way to go about it, here are 3 tips on the best way to flip your first home
Don’t Buy A Total Remodel
If you buy a property and spend so much money fixing it up, so much that you spend more than what the properties in that area is valued at, you will be at a loss.
Look for an undervalued building in a good area that needs mostly minor. One that needs minor repairs like expansions, repainting, landscaping, and other small repairs inside the building. This way you can save time and money.
Purchasing a house that needs major repairs can be time-consuming. Old houses are a risk to buy as well. You could be dealing with things like molds, out-of-date wiring, and tired plumbing. This will increase the cost of renovation.
Know Your Budget
If you are paying cash for the property, that means no interests. However, there are utility bills and other taxes that will need to be paid. The cost of renovating the property must also be budgeted.
If you buy a building that is worth 200k for 100k, spend 40k at most fixing it up, then sell the property for 200k, you make a 60k profit. 20k out of your profit will go into real estate commissions and other costs. After all the expenses, you would probably be going home with about 40k. Not bad!
Study The Neighborhood
Before you purchase the property, make sure it is in an area that is established. In such areas, the prices of properties are always rising. So, you can buy the house and decided to sell it after a year or two. This way you make more money. Also, consider if there are good schools. An area that has good schools will attract families.
It is very important to check that the house you are buying does not have a bad history. A history of a gruesome murder in the house will reduce your chances of selling the house. Also, check that the neighborhood is not a high crime area. This could affect the sale of the property.
In conclusion, do your research well before house flipping. Be sure to price out and do the budget for the repairs right, to avoid ending up with a loss. Check for the recent sales and how long properties stay on the market in the area. If an area has properties that have been on the market for over 6 months, it could mean that the demand for properties in the area is low.