Do you ever turn on HGTV and watch those house flipping shows where they make $100,000 in a month? Watching shows like these can easily make you fantasize about starting your own house flipping business. But is it really that easy? Not necessarily, but it’s not impossible either.
House flipping can be extremely lucrative if done correctly. However, if done incorrectly, you can find yourself with a flop. To help you achieve your house flipping dreams, we go over how to successfully start your own house flipping venture.
Create a business plan and set a budget
Before you begin flipping houses, you’re going to need a plan. Your business plan doesn’t have to be riddled with corporate jargon, but it should provide a clear picture of what your goals are, your timeline, and your budget. Having these criteria listed will help you develop a project scope and plan that will succeed.
The real estate market can be tricky, which is why you don’t have to make any risky moves for your first few homes. Start small with simple cosmetic repairs, such as new flooring, bathroom or kitchen update, or a fresh coat of paint.
The next step you want to take before flipping a home is securing your finances. You don’t want to put down an offer, get approved, and then sit there wondering how you’re going to afford the renovation. Instead, you want to find a lender who will offer you a loan with a fair interest rate.
A good loan option for house flipping is a bridge loan. Bridge loans are short-term loans that secure the gap between the sale of an existing home and the homebuyer’s new mortgage. If you’re looking to flip a house, a bridge loan will give you temporary cash to begin your project.
If you happen to find a home that you’d like to flip to live in, you can take out an owner occupied hard money loan. These loans allow you to get financing for the new home you’re flipping while using your existing home as collateral until you sell it and pay the loan off.
Do your research
With your business plan and financing plan squared away, it’s time to start the fun part—finding a home to flip. You can’t just start your adventure by finding a beat-up home, buying it, and flipping it. Why? Because you might not make your money back if it happens to be in a poor location or there’s expensive structural damage you didn’t notice.
That’s why you need to do your research. It’ll take time and patience, but waiting for the right property to open up at a reasonable price will pay off in the long run. You want to make sure you find a home that’s below market price and fits within your project scope. If it’s too expensive, keep looking.
It’s also important you keep additional costs in mind when you search for homes to flip, including:
- Closing costs
Buy the house
Once you’ve found a house you’d like to flip, sign the dotted line and buy the house. But before you bring the pen to the paper and close the deal, bring in a home inspector to examine the property to look for structural or mechanical issues. If any of these problems are found, it may be smart to skip that property because repairs like those can cost a fortune.
After you’ve determined your property is good to go, bring in your team of contractors or freelance contractors to get a quote on what it will cost to renovate certain areas of the home, such as the floors, cabinets, paint, electrical work, and plumbing. With those quotes, you’ll be able to determine what renovations fit within your budget and which ones may have to be tossed aside.
Begin renovating and put it on the market
With your plan ready and contractors hired, it’s time to begin renovating. Every day that goes by, you’re paying more in interest, insurance, utilities, and taxes. So, the faster you complete the job, the more money you’ll save in the long run.
Once the project is complete, you’ll be ready to put it on the market and sell your home. Make sure you have a good realtor who can find worthy buyers and sell it for a reasonable price.
Getting into the house flipping business can be daunting for outsiders looking in. However, with the tips outlined in this post, you’ll see how anyone can enter this field and make a profit from flipping a house. The key takeaway is to take your time and do your research to ensure your project brings in a profit.Do you have a news tip? Call us at (661) 298-1220, or send an email to firstname.lastname@example.org. Don’t miss a thing. Get breaking KHTS Santa Clarita News Alerts delivered right to your inbox. Report a typo or error, email Corrections@hometownstation.com
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