There are many ways to make money from the real estate industry. You can buy properties and hold on to them until their value appreciates. By then, you resell and rake in profit. Or you can rent out properties and have a steady stream of passive income. There’s also the approach called house flipping.
Basically, house flippers take fixer-uppers off the market. Usually, these listings come at reduced prices. Via house flipping, these fixer-uppers get the makeover they need. Soon they are as good as new. And for house flippers, who either work with experts such as The Gutter Works or DIY with hired labor, that means significant monetary gain.
However, that presentation makes the whole process sound easy. Of course, that’s not entirely the case. As with any profit-driven venture, flipping houses has its own complexities. And you better superbly navigate through those if you wish to avoid financial losses. To help you pull that off, here are some best practices worth following.
Be positive, but not too positive
A common attribute among top-notch house flippers is optimism. They see beauty even in the face of deterioration and neglect. They have such imaginative minds that they can conjure positive prospects for a home that currently looks inhabitable.
However, house flippers are not naive. They know when to say no. Usually, they say no to properties with severe foundation issues. That will take too much capital to rebuild. The same goes for severe water damage, mold infestation, and the presence of asbestos.
Skip hopeless neighborhoods
It’s easier to sell an ugly house in a good neighborhood than a good house in a hopeless neighborhood. So even if you come across the prettiest property, valued at such a low price, located in an area without any potential, you better skip it and look beyond.
Keep in mind that house buyers don’t only consider the physical condition of a house when deciding to purchase a property. They also want to ensure that they are making a smart investment. That involves weighing whether a particular location would allow significant property appreciation over time.
Look for potential
Not all neighborhoods have arrived. Some are just getting there. And you must find where these locations are. Get the first dibs on the listed properties therein, and in a couple of years, you’ll be raking in profit beyond your wildest approximations.
There are ways to know if a location has potential. Your first order of business is to drive around and look for signs of positive activities. Those might include active renovations on existing homes. That means people are investing in the area. Are there new commercial establishments being built? Those are great signs also. If you want to be extra sure, visit the municipal office. Ask for their plans. Are new schools and public spaces in the offing?
DIY only those you can
Doing it yourself means you increase your profit margin. But if you take too much time renovating, it means you’re losing valuable time. Your property could already be listed on the market, with buyers bidding like crazy, but instead, you’re stuck putting tiles in the property’s bathrooms. The worst possible outcome is you come up with subpar work that won’t fool even the most novice homebuyer.
Know when to outsource is what we’re saying. You do not have to do everything. Share your blessings, and you’ll get more.
Stick to a budget
An all too common scenario experienced by new flippers is they become consumed by the project. They start going overboard with their expenses. That’s a no-no. You must have the attitude of a professional investor, sticking to your original budget at all costs. And never fall in love with the house you’re trying to flip. Your efforts are not for you to enjoy. The profit you make after surrendering the fruit of your labor is your end goal.
House flipping is not something you do on a whim. Just because you read something online about some random person making considerable money from buying ugly houses and turning them into charming properties does not mean it’s for everyone. You need to have the acumen of a real estate pro to pull it off.
To gain that level of expertise, you need to familiarize the real estate industry from the inside out. Also, you must keep updated with the news. Everything that happens economy and politics-wise will affect how easy and for how much you can sell a flipped property. Spare yourself from making rookie mistakes and go straight to buying and selling like a seasoned house flipper.