Flipping Properties Part 1: Fixing the Fixer-Upper
Perhaps you’ve seen it in the movies or TV, or maybe you have friends who’ve tried it. Flipping houses has been a fairly recent trend, that is, purchasing a low-cost property and then making money by re-selling it, sometimes for 3 or 4 times its value. It seems like a dream come true – it’s like a share in stock that rises overnight and getting away with a wad of cash in the end.
Of course, flipping houses is not that simple, though it does follow a pattern: purchase a home for low-cost, renovate it and sell it at a profit, then buy the next home, renovate and sell that, and so on. There are some caveats of course, and it’s not just about buying and repainting a house. There’s so much more to flipping houses, and you should think carefully before you jump in.
Funding
As the old saying goes, you have to spend money, to make money. If you have enough money to buy a property outright, then good for you. Otherwise, you’ll either have to find investors or take on a loan from the bank. Either has its pros and cons – other investors mean having to share the profit, while taking on a loan will mean needing to cough up the downpayment (and monthly mortgage) on your own. There are government grants out there available to homeowners, but they greatly discourage these to be used for flipping or investing. Know more on Bank owned houses for sale.
Research
Do you know which neighborhoods are up-and-coming, that is, those with home values which a low enough so you can afford it, yet soon to rise by the time you’re ready to sell? It’s possible you can get a property that’s inexpensive, but might be located in a bad neighborhood – no one will want to buy it, no matter how beautiful it is. Do research on the neighborhood, as well as the house itself. Often, bank-owned properties (REO homes) are a good investment – these can be found in all types of neighborhoods and the owners are often eager to get rid of them. You can check out auctions or real estate agents specializing in foreclosed homes.
When choosing a property, inspect the home and make sure the repairs to be made are cosmetic only, not structural. Sometimes, paying a good surveyor to inspect the home is a good investment, especially if you want to avoid money pits.
DIY As Much As Possible
If you have some skill in making more than basic repairs or painting, such as fixing plumbing fixtures or electrical wiring, then you can save on the costs of hiring someone to do it for you. It’s easy to learn painting and hammering a nail, so try doing everything yourself. Sometimes, all you need is a new carpet, new lighting fixtures and scrubbing off the dirt to increase the vale of a home. If you must hire someone else, make sure your subcontractor is licensed, bonded and insured. Try to get a recommendation from someone you know, and once you’ve built a relationship with a subcontractor, you’ll find that the process becomes much easier.
Once you have your property ready and fixed up, you’ll then have to start selling the house (or perhaps you’ve already started to.) In Part 2, we’ll tackle how you can best sell your home, and how to close the deal on your property.
Know more on:Reo Properties for sale
Where’s the second part?