Tag Archive | "House Flipping"

How To Flip a House and Make Money

How To Flip a House and Make Money | Know What You Are Doing

House Flipping

Learning how to flip a house and make money can open up new money making opportunities to anyone who likes to speculate in real estate.   There is a fine line between making money flipping a house and having it turn into a money losing fiasco. It all comes down to finding the right house to flip and being realistic about the cost and timeline for the renovation project.   Taking the time to think a flip through and do some planning can save a lot of money and heartache in the long run.

Let’s face it, flipping a house sounds very alluring to anyone who likes to make money. Television shows, such as HGTV’s Flip or Flop, have popularized the idea of house flipping to make money and brought wide awareness to the fact that people are making money every day flipping houses.

But, of course, like most things, it is not as easy as it appears on television to flip a house. A person who buys a house that is in poor condition with the intention of fixing it up and selling it has to be realistic about the fact that unexpected costs and delays often occur when trying to fix up a house that has fallen into disrepair. There is the potential for the costs to be so great that a house flip turns into a money-losing venture.

How To Flip a House and Make Money – Do Research and Plan Ahead

House FlipThe difference between making or losing money on a house flip is often determined before a flipper even buys a property. This is because proper planning and realistic expectations are crucial to making money as a house flipper. While you may not be able to know the exact condition of a home you are considering buying as a flip, you can do research regarding expected issues that may come u, given the home’s age and condition. You can use this information to formulate a price to buy that makes economic sense, based on how much money you need to invest in the house to bring it to modern standards.

Since, homes that are in poor condition often have unexpected problems that cannot be foreseen, it is a good practice to increase your renovation estimate by ten to twenty-five percent to account for unexpected surprises once you get to work. Having a ten to twenty-five percent contingency built into your cost estimate will help you avoid house flips that have the potential to turn into money losers.   At the end of the process, if the contingency money is not needed, then it will add to your bottom line profit when you sell the house.

You should also research what similarly sized houses in the area are selling for that are in updated condition and if the real estate market in the local area is trending up or down. Keep in mind that there are many factors that ultimately determine a house’s value. These include, but are not limited to: schools, access to transportation, the view’s the house provides, and nearby recreational facilities. These are important considerations to think about, so you can develop a realistic expectation regarding what the house you are considering flipping will sell for once it has been renovated and is on the market and up for sale.

The most crucial moment in the house flipping process is when you add up your estimated purchase price, renovation costs, and contingency and compare the total costs to what a modern renovated house of similar size in the area you are flipping is selling for at the moment. If the profit potential is high enough to justify flipping the house, you can make a sound decision regarding whether to proceed.

How To Flip a House and Make Money – The Nuts and Bolts

Finished HomeTo flip a house and make money, it is important to focus on certain parts of the house flipping process. Once you have selected and purchased a home that is economically suitable for flipping, stay focused on what you need to do to renovate the house as quickly as possible, implementing the most important upgrades, so you can present your renovated home to homebuyers.

Set up a realistic project schedule, keeping in mind which tasks should be done before other tasks. Chances are your schedule will be blown at some point during the renovation project, but it is a good idea to have a schedule, so you know how things are progressing.

Find good contractors to work with. Your reputation as a home renovator is at stake and you want to save money. The best way to keep your reputation in good standing and save money on your house flip is to find good contractors in your area that charge reasonable rates. If you get your house flipping business going, you should be able to secure some discounts from contractors that you use often. Contractors like to secure relatively steady work, and will likely cut you a break in exchange for consistent work opportunities.

Be prepared to get your hands dirty and get to work. Many house flippers actively work on tearing apart and renovating the homes they are flipping. This hands-on approach has a number of benefits. First off, you can save a decent amount of money that will increase your profits once you sell the house. Secondly, it ensures that you are engaged and involved in the house flip and you are there to make quick decisions when expected circumstances arise.   This too will ultimately save you money, since you can quickly decide how to proceed and get your contractors back to work. You cannot afford to have contractors work only a part of workday when you are flipping a house.

Do not forget about the exterior of the house when you are getting ready to list it for sale. It does not matter how nice a house is inside, some buyers will not even come in and take a look if the outside is unappealing.   Make sure the house has enough curb appeal to entice buyers to come in and take a look.

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