House flipping is a common real estate investing type that involves buying a property such as a house, then selling it again for profit. It is actually a highly profitable investment, but with a higher risk. In fact, a lot of investors lose money from house flipping due to wrong decisions such as selling the house way below the purchase price, unexpected renovation costs, among others. To a lot of experts in flipping homes, the crucial key to house flipping success is the earlier you sell the house, the better profit you can get. Also, fixing, repairing and renovating the house increases its worth and is another way to make profit other than selling the house as is.
To help make the most out of your flipping experience, G. Brian Davis of Lending Home provided us with flipping a house checklist for a profitable house flipping by doing the right home rehab. Read the article below to learn more.
Flipping a House Checklist: A Cheat Sheet for Your Next Rehab & Flip
Anyone who tells you that flipping a house is as easy as 1-2-3 is probably selling something. But, in their defense, it’s not rocket science either.
While you still need a house flipping business plan to increase your chances of a profitable flip, the fundamentals of flipping a house don’t require a Ph.D. If you’re new to flipping houses, use the steps below as your “flipping a house checklist” to ensure your first few house flips run smoothly and profitably.
1. Find good deals
Learning how to find houses to flip is a lengthy discussion in itself, but the first step is deciding on a deal-finding strategy. Will you look for on-market deals, listed on the MLS? Perhaps bid at real estate auctions, or foreclosure auctions? Or are you looking off-market, through local wholesalers, or a direct mail campaign, etc.?
Pick one or two strategies, and learn everything you can about finding and buying investment properties through that approach.
Now is also a good time to line up lenders for financing that support your particular strategy. Get a pre-approval letter from your first-choice lender to submit along with your offers.
2. Make offers
Be prepared to submit five, ten, twenty or more offers before one is accepted. Real estate investing is a numbers game, so don’t be discouraged when your first – or tenth – offer is declined.
Before making an offer, set a firm ceiling price for negotiation. The seller may come back with a counteroffer, sparking a negotiation for price and buying terms. But before you enter a negotiation, get very clear on the property’s numbers.
Remember, you can always include a contingency clause in your offer. For example, if the home inspector finds previously-unknown problems with the property, you can structure your offer to allow cancellation with a full deposit refund. Your Realtor will provide the legal language in the contract if you choose this route. See full post here…
Before even thinking of house flipping, it is important to devise a plan first, which basically contains your approach, strategy, and contingencies in case your plan fails. The above checklist is a good way to start as well. By listing down the most crucial steps down the least important, you’ll have a good grasp of your strategy and so that you will not miss any relevant details on your house flipping deals.
If you’re being cautious on your repairs and renovations budget, then you must focus first on the most important things to repair before selling the house to be flipped. Bill Gassett of Max Real Estate Exposure shares the most important things to repair before selling the house. Check out his tips below and apply it to your flipping strategies.
Most Important Things to Repair Before Selling a House
It is easy to miss a lot of the wear and tear that happens to your house over the years. But when you start thinking about selling, the state of your home becomes much clearer.
Taking care of the most important things to repair before selling a house will put more money in your pocket! This is one of the primary reasons real estate agent recommend taking care of certain things before you list your home.
Repairs Worth Making Before You Sell
Paint is one of the cheapest, easiest ways to update the look of your home before you list it. And you don’t need to be a professional painter to make this work for you, either. Watch a few videos online, pick your colors and go to town!
Lighter and neutral colors are preferred when selling because they tend to appeal to most people. You never know who will walk through the door to view the house, so it makes sense to keep the styling primary.
The exterior is the first thing buyers will see, so you want it to look good. Replace missing fence boards, add sod if the yard is looking the worse for wear, and clean up any junk that may have accumulated in the yard or on the outside of any storage sheds.
Make sure the grass is mowed and that weeds are taken care of before someone comes to view the home. You can also plant some flowers in the beds to add color and make the place feel homier. Here are some low-cost exterior home improvements worth doing.
Kitchens Are Essential to Home Sales
Everyone wants a large, spacious kitchen with all new appliances – where they can cook and entertain (even if they never do either). Now your kitchen may not satisfy these desires without significant upgrades, which may not make sense financially.
Do not do a complete kitchen renovation unless your agent tells you that he or she believes you can make your money back on the sale. See full post here…
On a tight budget, you don’t have to repair or renovate the entire house, especially if the overall cost will reduce your profitability significantly. Focus on the most important areas on the house that will depreciate its value if left unrepaired. Follow the steps above to minimize the cost of repairs while maximizing your profitability.
Speaking of maximizing your profitability in house flipping, Auction.com shared awesome tips for boosting profits in house flipping. Read the article below to learn more.
Tips for Flips: Part I: 4 Ways to Boost Your Profits
Many investors today have realized that it can be lucrative to “flip” homes—buy an underpriced house, fix it up, and quickly re-sell it for full neighborhood value. It’s so easy to believe the real estate cable TV shows that promise huge profits on every deal.
But they leave out all of the other expenses—closing costs, real estate commissions, taxes, insurance, utilities, and miscellaneous property maintenance—that come with a real estate transaction. In real life, the actual net profit is often far less.
If you want to maximize your profits, it’s imperative that you learn how to minimize costs while rehabbing. Here are several tools that I’ve used over the many years of my real estate investment career.
1. Use cash or cash equivalents
The least expensive way to flip a home is by using cash. Although you tie up those funds for a few months, when you sell the home, your return on investment should be substantial, and much higher than parking your money in a savings account or CD.
If you don’t have enough cash to purchase a home, the next cheapest source is a home equity line of Credit (HELOC). These are low-interest, variable-rate lines of credit that are secured by either your primary residence or an investment property. Typically, the HELOC rate is set about 1–2% above the prime rate, which is currently 3.25%. You need to put the HELOC in place before you bid on any homes; then you can bid on the home as a “cash deal,” rather than as a “financing deal.”
Just remember that a HELOC, just like a regular mortgage, puts a lien on the property that it secures. If you don’t make your payments, you could lose that property to foreclosure.
2. Target homes that will sell quickly
When choosing a property to buy and flip, make sure that you buy one that has the best chance of being re-sold quickly. That means you want to buy a home in an area that has a good reputation, good schools, and a low crime rate, among other features. You should also buy one that will re-sell in a price range that attracts the largest number of potential buyers. For example, if you flip a home that’s really cheap, there may not be people in the area whose credit scores will qualify them for a loan.
Conversely, if you buy a very expensive home to re-sell, there will be fewer people who can afford to purchase it, and it will take longer to sell. Look for homes that you can flip into that sweet spot in the middle of the area’s price range. Click here to read the rest of this post…
There are lots of ways to boost your profit margin in house flipping. Purchasing the house to be flipped in cash gives you more opportunity to earn more since you don’t have to pay interest rates from loans. In addition, using your skills and experience in finding homes that will sell quickly allows buying more houses, thus more opportunity to make profits. Other factors such as location, high homebuyer demographics, etc. must also be taken into consideration.
House flipping is indeed a profitable real estate investment type, but with a higher risk if not managed properly. Also, it requires knowledge, skills, and experience to get the best deals. With that said, if you plan to do house flipping but lacks the capital, you may sell your other property (if you have one) and raise the needed capital. Dependable Homebuyers can help you sell your house fast and get the needed money for your latest investment ventures. To learn more, visit us at https://www.dependablehomebuyers.com and we look forward to hearing from you.
1402 Belt St, Baltimore, MD 21230