Flipping a house is when an individual buys a home, renovates it and resells for a hopefully higher price. It can be a great way of making money, but it can also be risky. You can fix-up and flip a house and make no money or even lose money on the deal. That is why it’s best to first get educated about this type of investing. Below are some tips regarding how to fix and flip designed to help you turn a profit if you give it a try.
Finance the flip with cash
Using debt to finance a flip can lead to paying interest for months. This increases the amount you have to sell the house for to make profit. Cash flippers have the freedom of waiting out a slow market and don’t risk lowering their price which would cut into their profit. The financial risk involved in house flipping becomes greater if you can’t pay cash. You might be forced to act out of desperation and sell the house at a lower price.
Work with professionals
These include skilled professionals such as plumbers and carpenters as well as professional builders. Make sure you have the skills yourself or know people you trust who have the skills, knowledge and experience to fix up a house a fair price. These people are the key to a successful fix and flip.
Make the right repairs
Newbie investors make the mistake of either over-improving or under improving or investing in the wrong improvements. Do your research before buying a house and evaluate all the repairs to be done. There are repairs that add little or no value to the house while others boost your profits or chances of selling the house. The best-selling points are kitchens and bathrooms especially in a fix and flip house.
It’s important you leave yourself some room for profit after the repairs. If you overpay for the property upfront, that will be difficult. Your realtor can help you evaluate the value of the house and decide how much it is worth and negotiate with the seller. If you are an investor who knows only a little about the real estate market, its recommended that you get advice from a real estate agent.
Work with a local real estate agent
An experienced realtor is an expert on the local real estate market. The behaviors and trends of the market and whether or not a property or neighborhood is worth investing in are things a realtor can help you with. The realtor gives you advice and practical guidance required to make a smart and profitable investment. A good realtor is a gem especially if you want to venture into real estate investing.
House flipping can make you money if you do it right, but get some good advice and do your research. Be patient and smart and you may be on your way to building your empire.