So you’ve heard great things about flipping properties and you’re ready to get started! Congrats, real estate investing is an intense world that can carry big profits. The challenge is setting yourself up for a successful flip and buying the right property.
Here are our 5 tips for buying a house to flip:
As with all things in real estate you can’t move forward until you’ve secured funding. When you’re investing it’s generally best to use cash, but you can talk with a lender about other financing options. Remember, you’ll be paying interest for every month your flipp hasn’t sold -- including when you’re working on it. Don’t overlook early withdrawal fees, early repayment fees and other potentially hidden costs when you’re figuring out how much your funding will cost you.
Location is one of the most important aspects of real estate. If you’re buying a home to fix and flip it needs to be in a desireable location so it will sell quickly. For example: the Denver area real estate market is going crazy and homes are flying off the market, but flipping a property in Colorado Springs won’t get you the same results even though it’s nearby. At the same time, because the Denver market is so competitive it can be hard to find homes at a price that makes sense to flip.
The Right Projects
You’re looking for a home needing help, but not a home needing to be torn down. Look for outdated carpet, old doors, walls that can be easily moved, outdated fixtures and other cosmetic issues. Homes needing new electrical, mold remediation or a new roof will require a ton of investment and decrease your bottom line. As you get estimates for jobs, many experts suggest adding 20% to the final estimate to pad your budget in case of unknowns.
Most things can be fixed but a house with bad bones is one to stay away from. When looking for houses keep your eyes peeled for cracks in the walls, slanting floors and improperly closing doors and windows. These are all signs of a bad foundation and something to avoid. Foundations, along with floor joists, framing and mechanics, are all major, and expensive, repairs.
When picking out a home to buy you want to find one under current market value, otherwise there is no money to be made. Hiring a real estate agent is the best way to prevent yourself from making a bad investment. Consult an agent about the value of the house and the potential value you will be able to add.
House flipping can be a productive and lucrative path if you do it right. Before you start the process of buying a flipper, get in touch, we would love to be your go-to real estate partner.
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