The newest trend in the housing market is flipping houses. Just look at all the shows on HGTV that are based on this very premise. There has been a recent fascination with fixing up houses to resell, and it is amazing to watch the final product come through. If you’re in the market to flip a house, here are some things that you should know.
One thing that first-time flippers, or flippers in general, may underestimate are the costs associated with flipping houses. The obvious first expense is the property acquisition cost. Paying cash eliminates interest, but there are still other costs associated with the purchase, such as taxes and utilities. If you are unable to pay with cash, you need to research your different borrowing options and find a lender that offers low-interest rate mortgages. In addition to the costs of acquiring of the house, flippers should also consider the costs of renovating the project, as well as any hidden costs they may occur, such as any issues in the house that may not have been noticed before renovation started.
More Things to Consider When Flipping a House
Another thing that flippers might not take into consideration is the knowledge it takes the carry them through a flip. A lot of already-skilled professionals do flip work on the side. If you do not already have the skills as a handyman or for home improvement, you’ll have to endure the costs to hire these professionals. If you plan on flipping a lot of houses, consider building a team of people that are familiar with all aspects of flipping houses, such as legal, accounting, and construction information. One thing that a person should do before flipping a house is to get a good lay of the land surrounding the possible property. Knowing what characteristics people most look for in these types of houses and what they usually sell for can help you to understand more of what should, or can be, done.
Taking Your Time
Patience is a key ingredient in flipping houses, and finding the right property takes time. Finding the right team to help also takes time. Finding the right decor for the house takes time. Selling the finished home takes time, too. Notice a pattern? Like anything, if you want the flip to turn out right, you’ve got to take your time with it, making sure you are making the right decisions when and where possible.
Finally, make sure that you have a plan! Seems fairly basic, but very important. Know your budget and where and how you want to spend the money. Know your after-repair value of the house you are going to flip, which is the amount the house will sell for after everything is done, and buy and rehab the house for 70% or less than what you believe the final selling price will be.
Flipping houses seems to be a “trend” that is here to stay. Before you start a flip, make sure you understand everything that is coming your way.