In order to be successful in the house flipping business you need to have an extreme amount of knowledge concerning your local real estate market. Knowing the market value of comparable homes in the neighborhood will give you the insight you need to see if you are getting a deal on a property you plan to fix and flip. It wouldn’t be a bad idea if you went ahead and got your real estate license before you get into fixing and flipping homes. This will only help you in the long run because you will have access to the local multiple listing service. That gives you access to the asking and selling price of the home and you get a first hand look at the properties as the go on the market. This could help you find great bargains on properties to fix and flip.
How to Choose a Property to Flip
When choosing a property to fix and flip you need to be sure to buy them at a large discount in order to make a profit off of it. You have to make sure to buy the property at a lower price
than asking, in order for there to be a sufficient profit for you, plus money to cover the cost of renovations.
When buying houses to fix and flip you need to rely solely one the numbers aspect of it rather than emotions. If you buy a home just because you like it, you could end up with it being a hard sell and end up having to rent it out just to get some money coming in from it until you can sell it. Any property that you obtain with the intent to flip, you need to make sure that it is suitable for renting if that problem ever arises for you.
In order to figure out how much you should rent a property for, you need to check the market to find what other comparable homes in the area are being rented out for. Plus the rent needs to be high enough for you to cover insurance, taxes, principal, interest and a little extra in order to generate any profit.
Flipping Properties Can Lead to Bidding Wars
Most likely there will be other fix and flippers that will be looking for a deal on a property too. Bidding wars can end up happening if a property is priced low enough. So, if your looking to get
the property for yourself, you need to be ready to make an offer quickly. In order to make an offer you will need to have an idea of what the cost of the repairs that will need to be done to the property.
If you don’t have the experience in repairs, make sure you have a range of people that will be able to give you an estimate on short notice. Always be careful and make sure the purchase price of the property
plus the cost of the repairs is greater than the market value. Otherwise, you could end up losing money.
You will need to make sure that you have enough money for the project by securing a mortgage or hard money loan. This is very important because you will need the money for the purchase plus the repairs. If you don’t secure enough funds through a loan then you could be looking at paying out of pocket for repairs and that could get very pricey. Also, expect to need extra cash for any problems that may arise while flipping the home. This usually happens in pretty much every home so expect it to happen.
Fixing and Flipping houses can be a great business to get into to make some extra cash. You just need to make sure that you learn everything you can before going into a project like this that way you don’t
lose money. Make sure that you get to know as many people in the fixing and flipping business and ask as many questions as you can so you have an idea of what the business is like.
Try to meet as many different contractors as you can because if you cant do the necessary repairs yourself you will need to hire a contractor to do them and the more you know, the better of a deal you can get on the price because they will be in competition with each other to get the business. Contractors will compete by lowering the bids for the job in order to secure the contract so always ask for multiple quotes before you settle on just one.