Flipping houses is a new trend in the current real estate market. Fixer-uppers though in bad condition, can also bring huge profits to you! Just a touch of paint here and some fixings there, you will have yourself a brand-new house! It’s just like a home makeover!
In this article, we will be explaining how you can flip a house in 10 easy steps and to get started with this transformation, let’s understand what flipping houses mean.
What does flipping a house mean?
Flipping a house is a process of transforming a fixer-upper into a better renovated house and selling it for a higher price on the real estate market. Investors generally invest in a fixer-upper which comes for a lesser price and renovates the entire house which includes adding a new coat of paint, replacing the doors and windows, hinges, utilities and plumbing and other essentials of the house. However, if you are in the business of flipping houses, it is important to understand that flipping houses involves risks just like any other business. It is a buying and selling business and therefore important that you keep your emotions in check to avoid it from clouded judgements and making bad choices.
Steps to flipping a house
Here are 8 steps on how to flip easily and sell on the real estate market:
Research the real estate market
Now before you start to buy any house off the market, it is essential that you research the real estate market, because not all markets are great for flipping houses. For example, if you have £15133, then you should not invest in houses that begin with £801171. Even loans or any other financing will not be able to cover gap. What you need to do is focus on lesser priced homes if you have less to work with. The lesser the gap between the house price and the money you must work on, the better and you can also opt for financial help or loans in this case.
Setting a budget
Flipping houses is obviously a part of real estate and just like having a plan to buy a well-furnished house or a new altogether, same way, you should have a plan to flip a house. And in a plan, the three important things to consider is budget, project-scope, and timeline.
Keeping in a budget can clear out a lot of things before you start so that you will know how much to spend on what while renovating the entire house. Check what kind of scopes you are ready to start for example checking utilities or plumbing and wiring, or flooring. Also make sure you have a timeline for the house to be ready. This will help you in being efficient with your work.
Confirm financing for your house flips
Ensure that you have a lender who can help in funding your deal or offer of the house. This is important because some houses have hidden charges or other charges that you need to know before you start your work on the house. Especially if you take a loan, the interest rates tend be higher compared to traditional mortgages, but don’t matter much. So, basically, the interest rates don’t have much of an impact of the total costs of flipping a house.
Now this is an advantage. You cannot flip a house on your own, and even if you can, then it would take longer than expected and you may even lose interest or leave it halfway. Having contractors on your list is the best. You can hire them per project and pay them accordingly and get your flipping done within a specific timeline. Having a network of contractors including roofers, electricians, painters, plumbers, handymen, etc. are best to call for flipping houses as they have experience renovating.
As soon as you are done with the renovation, ensure to have a home inspector to check out the premises before you sell it on the real estate market.
Finding the right house to flip
The most important part of flipping a house is that you need to find great deals to buy the house. The criteria of buying such a house are that it should not only be under the market value, but also have a wide margin to cover all the expenses which occur during the flipping of a house such as closing costs, renovations, fees of realtors, etc.
Buying the house
Now the property has been bought, you must have a home inspector check the home before renovations to see which damages must be given immediate attention. The process varies from house to house. Some houses may have minor damages, or some may have major changes that need to be done immediately. For example, seasoned house flippers may first investigate cosmetic repairs such as wiring or bathroom renovations before renovating the entire house. Also, it’s important that the house has a sound and firm structure.
If the property you bought isn’t as bad as you expected, then you can immediately contact your contractors, compare quotes, and start off.
So now that you are going to start renovating, your clock is ticking because you are carrying a lot of costs such as utilities, taxes, insurance and owning the property. You sure don’t want to lose money in all that!
So, the faster you finish the project and sell it off on the real estate market, the quicker you can pay off the loan you took for renovating the house.
Also, ensure that your contractors are efficient, because as they say that they would wrap the whole thing up in a week or month, it usually takes longer than that. They can also raise the price of the costs for flipping when they are still working in the project. So it is important that you choose the right contractor.
Sell your flipped house
Now the difficult part is done and it’s time to sell your house! Now when you’re selling your house, as discussed before, you need to research the market and have a realtor who can guide you accordingly. Make sure you have a seasoned realtor who has experience in selling flipped houses. Also, before selling the house, it would be best to have the home inspected again to avoid any problems ahead.
When pricing the house ensure that you check the market prices and add value to the home accordingly. It shouldn’t be expensive and shouldn’t be below average as well.
Although flipping houses is a slightly longer process than just buying a house, it can earn you loads of profits! What’s important is that you have a good network of contractors, knowledge on the market and a proper budget and timeline, you are good to go in your flipping homes career!