Today, the home prices are rising at a fast rate and for-sale listings are still very less. This makes the process of house-flipping more competitive than ever before. It also means potentially excellent returns for real estate investors.
House flipping basics
House-flipping is a procedure when real estate investors buy homes, generally at auction, and then sell them off after some time at a handsome profit. Remember, flipping houses is hard work, and there is a lot to keep in mind before attempting this process for the first time. You need a great credit for this process. You need sufficient cash to pay for the home and all the required renovations. You should check your credit report to find out what your score is. If you find you don’t have a satisfactory score, start building a good one. Pay your monthly bills on time, clear your debts and also keep your credit card balance to minimum. There are more things you can do to improve your credit score, so invest time to do everything you can. This is because the higher the credit score, the better interest you will get on a home loan.
You also need enough cash if you want to flip a property. Investors without a sizable down payment can fall into financial problems when they buy a home. They may then use credit cards for the renovations or the improvement work. So, make sure you have enough cash when home ownership and flipping is in your mind, or else you will have a tough financial time.
Now the question arises – what are the tips for a successful house flip?
Consider the market value of the home
According to real estate experts, make sure the price of the home you are considering is below its value in the market. You can search online to see many of foreclosed homes for sale, but never buy a home without seeing it in person. This is one of the main mistakes a home buyer makes in the flipping process. Investigate the property in-person before you decide to buy it.
Consider your budget
You should consider how much you can spend on both the house and the renovation work. Also, include how much risk you are prepared to take in the entire process. Price out everything, including the loan, taxes, utilities, labor, material costs and the maintenance costs. Once you have your financial plan in front of you, you can start shopping for the homes that meet your budget.
Identify your buyer, renovate accordingly, and educate them nicely
You should spend your money wisely in the renovation work. Know your buyer as this will help you in the renovation process. Renovate your home keeping the locality in mind. This will help you know what kind of buyers will be interested in your home. For example, if there are many schools in the neighborhood, young buyers will be interested in buying your home. Next, you should educate the buyers about every detail you have taken care of to transform the home according to today’s standards.
Work with a real estate expert
Partner with a real estate expert with long-term experience in the field of flipping homes. They will assist you to get good returns on your investment. They have a great understanding of the local real estate market and the neighborhood. Also, they have tie-ups with the leading renovation contractors. They will help you prevent expensive mistakes and save you a good amount of time on your renovation project.
No doubt, flipping houses is a risky business for the home buyers. But if you make smart, sensible decisions, you can make huge profits. Before you go into the real estate investing world, do research to make sure it is right for you.
Prospect Financial Group
948 Garnet Avenue
San Diego, CA 92109
NMLS: 349089 | BRE: 01837707
Jason Vondrak has been in the mortgage industry since 2004 and co-founded the mortgage brokerage Prospect Financial Group in 2006 in San Diego, California. Today he serves as President and CEO of Prospect Financial Group and the president and founder of Prospect Property Group, a real estate development company, established in 2012.
“I’ve had the privilege to serve in an industry that exists to ensure homeownership remains among the top priorities of government and citizens alike. Over the years, it has been a pleasure working alongside homeowners, real estate professionals, and business associates combining efforts and teaming up to help homeowners realize the dream of home ownership.”