A beginner’s guide to flipping houses
Making money fast is everyone’s dream. For many people, flipping real estate opens the door to a lucrative lifestyle, but have you ever wondered how these people actually manage to do it?
If you’re ready to start your fix and flip journey, here’s a beginner’s guide to getting you started.
Unless you’ve already got a deposit saved, you’ll first need to find yourself some funding. Fix and flip loans are a specific type of short-term loan that offers a large lump sum fast. These loans require quicker repayment than a traditional mortgage, but since the idea is to buy low and sell high, you should have no problem paying back the loan as soon as you sell your first property.
Short-term loans tend to be easier to accept, as, in a longer-term loan, there is more risk that your current financial situation could change. However, as long as you meet the requirements now, fix and flip loans could be the quickest and easiest way to get yourself on the market.
To succeed in flipping real estate, you need to have a good grasp of the market. Therefore, before jumping into your first purchase, you should take the time to research the market in-depth, to understand when are the best times to buy, sell and what potential changes could occur in the next few years.
When you begin to look at houses to buy, you will want to research the area and house prices in that area. More specifically, you want to see how much houses are actually selling for, rather than their original listing price. This will give you a better idea as to how much you could realistically make.
Even if you want to make flipping houses as cost-efficient as possible, it may still be a good idea to consult with a mortgage lender or estate agent for more insight into where they recommend investing and how you can set an appropriate listing price.
Set your budget
Before scoping out the market, set a budget. You want to fully understand how much you can comfortably afford to spend on a property before selling it on. Some houses may seem like a bargain not to be missed, but there could be expensive repairs that need doing – ultimately reducing your overall profits.
There may be a need for small renovations for each flip, like fitting a new kitchen or bathroom. But, again, setting yourself a budget will give you more of an idea as to the type of house you should buy.
Marketing your property is another cost you’ll need to account for, which you’ll also need to include in your budget. Some homes may sell in minutes, while others might need a little boost.
When making changes to a property before flipping it, you need to think smart about renovations. Not every property needs to have brand new carpets, expensive appliances, and new tiling. Instead, understand which renovations will really add value (while not breaking the bank to implement). Any renovations you make to your flip house should rake in a profit.
Now all that’s left to do is find your first house or foreclosure. Good luck!