House flipping is something to get into that has the potential to create a lot of money for you. But there are some things that you have to know going into it. Anyone who’s successfully flipped houses will tell you that you are going to have to have the money to buy the property.
This is something that makes most people pause and think that they don’t have the kind of money up front that it takes to buy a property. You don’t have to use your own money.
You can get the money from lenders and these can be family members, friends, real estate investors and other money lending businesses. You can find some lenders through investment groups.
Just watch the interest rate. If you have good credit and your debt ratio is low, you can take out a loan against property you have, or a line of credit. Some people get creative with their financing for a flip house.
They use a little of theirs, some from family and some from a loan. Some people create a joint venture and split the financing costs. When it comes to deciding the financing amount, always plan on spending more than you think you might need because there are always glitches.
You need to understand how real estate works. You can educate yourself about this by having a mentor in the real estate business or by taking classes in it. But you must know how buying and selling works, how to determine which location is good to buy a flip house in, and what the market is doing.
You need a good figure on what the house will be worth on the market once everything’s said and done. Look for foreclosed homes, homes that look rough but are basically in good shape and homes in sought after locations.
You also need to know how to work on a house. It’s okay to hire those who know what they’re doing when it comes to working on a house, but you need to know what should be done and what a good job looks like on a repair or renovation.
Because otherwise, you won’t understand what has to be done or if it’s being done correctly and up to code. You can have a contractor come out and look at the flip house to tell you what’s going to be involved in fixing it up.
This will help give you a ballpark figure of what you’re going to spend to get the house ready. Just keep in mind that renovation estimates are just estimates. As the work progresses, problems are usually uncovered – so give yourself not only a financial buffer, but a time buffer for getting the project done as well.
When the home is done, make sure it has market appeal by staging the home. There are certain people you’re going to need to be successful with house flipping.
You need someone who’s knowledgeable about the market if you’re not. You need someone to handle the paperwork when you sell the house. You need someone to handle the financial side who can keep the project within budget and moving along.
You need people who are skilled in all areas of home flipping. That includes people who can work on bringing the yard up to a condition that’s appealing to buyers.
You need someone who can put in a floor or renovate a kitchen. You need electricians, plumbers, heating and air experts and any other skilled person to handle areas outside of your expertise.
Understand that time and problems equal a demand for more money. The longer it takes to complete and the more problematic a flip, the more it eats into your profits.
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