When it comes to making money flipping a house, there are quite a few things you should know. It is never smart to just jump into something, especially something as costly as flipping houses, before doing all the necessary research. Here are our 8 tips for flipping a house to make a profit.
- Know the business
If flipping houses was an easy business, everyone would be doing it. The most common mistakes people make when flipping a house is not knowing the business. You should be aware of how much the houses in your area are selling for and what your ROI (return on investment) will be.
- Understand the risks
Flipping a house can be quite the risk and you should go into it knowing what those are. When you flip a house, you will be investing a lot of time and, of course, a lot of money. You will need to buy a house and then put money into it before you can sell. Property owners have been known to have these houses on their hands for longer than they originally planned to and you need to be aware that this can happen. Keep an eye on the value of the homes around the neighborhood to make sure there is still a profit to be made.
- Obtain a loan
It is best to get a loan for several thousand dollars more than the cost of the home you are planning to flip. This will allow for you to use the extra money in repairs and improvements. You can always negotiate the price of the property, so make sure you are getting the best possible price available. Make sure there is a way, or multiple ways, you can get out of your contract if you need to.
- Hire the right people
Only hire people who have good reputations. You will most likely need to hire a general contractor who has experience with flipping houses. Make sure they have some quality references and proof of their previous projects. They should know how to do some structural work as well as remodeling and renovating. Another important aspect to remember is waste removal and how you will go about tossing out all your construction debris. Budget Dumpster is a great resource for affordable dumpster rentals in many cities across the US.
- Give yourself enough time
Flipping a house can suck up a lot of your free time, so make sure you are ready for the commitment. Many people find it helpful to make a timeline of what they want to do and when they want to do it. It is probably best to sit down with your contractor and go over this timeline, to get their professional opinion. Do your best to create realistic goals and try to meet them.
- Most important fixes first
Just like any other type of project, it is best to do the most important and most intricate parts first. That way, if your plan changes or if you fall behind schedule, you will have the biggest part already completed. I would constitute major fixes as things such as rewiring, reflooring or repainting poorly done paintwork. Everything else can most likely wait until these things are finished.
- What will you do yourself?
If you want to flip a house, then I’m assuming you want some part of the process, so this is where you will need to figure out what you are going to do. The smaller projects such as painting and tearing out carpet are things that you can most likely do on your own. It will also save you quite a bit of money to do these simple projects on your own versus paying a contactor to do them.
- Sell the home
Of course, the final aspect of flipping a house is the actual selling of the home. Remember to follow our tips for staging a home to sell. It is also extremely important to price the home with enough room to negotiate. No one will want to pay your asking price, so it is important to leave room in your price for negotiations. Also, remember to report your profit to the IRS to avoid any taxing issues later down the road.
We hope these 8 tips for flipping a house have helped you to prepare for your next house flipping project. Feel free to leave us a comment in the section below with any suggestions or questions you may have. Thanks for reading and be sure to check back tomorrow for some more helpful information.