Do you know about house flipping? If you are not familiar with the term, well, house flipping means buying a house, usually at an auction, then reselling it at a high price. It can be a good condition house or a house that needs repair, either of them the house flipper will take it as long as he sees profits in that investment.
House flipping may perhaps be the most popular method of real estate investing today. Why? It offers quick results and significant profits. Still, there are always two sides of things, and you cannot dismiss the gloomy side of it: Not all house flippers are successful. Therefore, you need to know about house flipping and some tips on how to get successful from it.
House Flipping Requirements
There are excellent bargains in the real estate market. In fact, there are a lot foreclosed homes that are for sale, and there will be more coming. However, due to the strict lending standards, and a depressed consumer market, you need a lot of guts and cash to embark on house flipping. Just think of buying a $60,000 house, then paying for the costs in renovations, and there will still be no buyer. As such, you will now pay the mortgage, insurance, utilities, and property taxes. For you to ensure profits here are the requirements that you need to know.
An Excellent Credit Score
It is so hard now to apply for home loans as lenders now have strict requirements, especially for those who are in big time house flipping. So you need to have an excellent credit score for you to avail it easily.
A Boatload of Cash
You need to have the cash for the down payment, so you will not have to dish out money for private mortgage insurance on your next mortgage. You can also avail for a home equity line of credit, if you passed the requirements, and if you are buying through auction.
The Factors for a Good Real Estate Investment
In every success, there’s a secret, and this is true in house flipping. For example, you must get educated even before you go into this kind of business.
Home buyers always have on the top of their minds the location of the house. Therefore, you should look for a house that is in a desirable location, in a place where people want to live, interact, and do business. But this does not mean that the job will be easy. For example, find a house near a mall, a good school, or a hospital. You should also consider other indicators such as employment growth and real estate sales in an area around your property.
It is always “bad business” for real estate investors to buy a house that is not in a good and livable condition. For sure, you do not want to raze the house down and rebuild it from scratch. Thus, you need to look for a house that is structurally sound and in excellent condition. You need to know what the qualities of a structurally sound house are, or you can bring someone who has expertise in electric, plumbing, and home construction for you to choose an excellent investment.
Select a House near You
Keep in mind that you have to work on this house for weeks or months to come. So for you to save money on transportation, you need to invest in a house that is near you. Avoid a too distant location from where you live, because otherwise, that means spending money on gas or commuting expenses.
Consider the Neighborhood Value
When investing in a house, make sure that its price is below its value in the local market. For example, go for a house that is low in value but located in a great neighborhood, not a great house in a run-down neighborhood. The worst house located in a great neighborhood will likely to go up in value in the future, and that means profit for you.
Know What Home Improvements You Should Do
The trend in home designs matters when it comes to increasing the value of the house. Therefore, you should know the latest in interior designs to make your real estate investment attractive to buyers. In general, home improvements that make the house go up in value include repainting exteriors, upgrading the kitchen, putting up extra storage space, installing green technologies, or having a garage.
Build a Network
Before you even start looking for a house investment to flip, you need to start talking to prospective buyers and build a network. There are many ways to build relationships with potential buyers. Tell them that you are planning to embark on house flipping business. One person can tap another to call you for business in the future. Having a network of buyers lined up when you purchase a home investment will make it easy for you to sell the house when you are ready to flip a house.
Look for a Mentor
If you know someone who is doing an excellent job in house flipping, do not hesitate to ask him for advice. You can offer him an incentive as to the fact that you are learning from him. For instance, in exchange for professional advice, you can give him a percentage of your first successful deal. As such, your mentor will get motivated to impart his knowledge to you, and you can also make sure that you get the right knowledge.
Learn the Ways of Effective Negotiation
In house flipping, you need to learn and include effective negotiation to your skill set. When you have an effective negotiating skill, you are likely to get the upper hand every time you haggle with contractors and potential buyers. Most of the time, your negotiating ability can spell a significant profit for your business.
Indeed, house flipping involves significant risks, but also enormous profits. If you want to enter into this kind of business, you need to get prepared for the consequences, good or bad. A house flipper also needs to make tough decisions. Therefore, you need to educate yourself first on the ways of the business to make yourself successful.
Yassi Parrish is a blogger and a businesswoman. She writes about real estate investing and property preservation. Her trusted source of information about these topics is the real estate investment firm, Ashe Morgan. In her free time, she loves to read novels and watch romantic films.