6 Things To Consider Before Flipping Houses
We’ve seen it on home makeover TV shows: A couple buys a dilapidated house, turns it into an attractive “new” home, and sells it for a sumptuous profit, all within a few months. Everyone can do it, but it isn’t as easy as it seems.
Many people make huge sums of money flipping houses, but the true secret to achieving success is to really know what you are doing. It is also becoming harder to get a house to flip, because the market is becoming too strong for bargain priced-homes.
Here are 6 things to take into consideration before getting into the house flipping business.
1. Financial Sense
Consider all the costs that are involved in renovating a house, including closing costs, realtor fees, and selling costs. Do your research and make sure that the final price of the house will be more than what you spent on it. Otherwise, there will be no need to waste your funds on a low returning property.
2. What Is The State Of The Real Estate Market?
What are the property speculators saying? What’s the performance of the real estate market in your area of interest? How are the prices? Is there demand? These are some of the questions that you need to ask yourself while evaluating the property market in your area of interest. Although the trick is to buy as low as possible, and sell as high as possible, it doesn’t always work everywhere.
3. The Timing
Time is critical in real estate. How long do the necessary permits take to be processed? How long will the renovation process take? Will you be able to afford it on your own? You also need to know that you’ll be required to process the mortgage, utilities, and taxes while renovation is underway. The longer it takes to put everything together, the deeper it will cut into your profit margin.
4. Are You Prepared?
Do the proper homework before hopping in and buying the home to renovate and flip it. There is a lot of puzzle pieces to put together, and being entirely unaware could cost you a lot of money. More importantly, know your potential buyer and the market.
5. Professional Advice
You can’t abandon the experts in this critical venture. Check with your lawyer and accountant regarding your legal obligations and tax implications.
No one wants to be taxed on the accrued profits, but that’s exactly what may happen if you don’t seek the advice of the relevant professionals. The realtor’s advice is needed when it comes to areas like values and market trends.
6. Do You Have Access To Sufficient Cash?
Renovating a property can cost a lot of money, not only with regular repairs, but with unexpected ones as well. The cost can get higher if the renovation process is plagued with delays and disruptions along the way.
For this reason, you should ensure that you have sufficient funds to complete the renovation and everything else involved in flipping.
Conclusion
In a nutshell, you need more than the will to succeed for your house flipping venture to turn out profitable. Factors such as your access to sufficient funds, expert advice, and the state of the real estate market need to be put into consideration.