The average house sells in just 56 days. This means that now is the perfect time to get started with fixing and flipping houses. It’s a simple way to turn your passion for home renovations into a lucrative side-business or full-time gig.
If you’re new to the industry, it’s normal to feel a bit confused about how to flip houses and turn a profit as quickly as possible.
Though there are a lot of things you need to keep in mind, the actual steps you need to take when starting out are fairly simple. Here’s what you need to know.
Choose the Right Location
The main goal of any fix-and-flip project is to make a profit once you turn around and sell the property. To do this, you need to choose an area with a vibrant real estate market.
Do your research and look at the types of homes that are currently selling in the area. What types of features do they have? Are properties selling almost as soon as they’re getting listed?
If so, the area is worth considering.
However, if the area has a high crime rate or homes that look run down or unsellable, keep looking. Remember, you need people to show interest in the property once you list it. If the area isn’t great, buyers will happily pay more to move to a more desirable location.
Establish a Firm Budget
When you’re first looking into how to flip houses for beginners, the process can seem like little more than a fun project. Unfortunately, this isn’t the case. Fixing and flipping properties is a business and you need to treat it as such.
This means you need to set a firm budget for your property search from the very beginning.
Think about how much of your personal savings you’re willing to use toward the purchase of the property. Then, look at how much you can afford to pay in loans each month without putting strain on your personal budget.
You also need to think about how much you’re willing to spend on renovations and improvements. Remember, the more you put into the property, the more you can ask for it but you still need to be cautious about what you spend.
Once you have a number in mind, you need to stick to that number whenever possible.
Work With a Buyer’s Agent
There’s a fine line between choosing a property that’s a diamond in the rough and one that’s a complete tear-down. When you start your search, the best thing you can do is to work with a real estate agent to help you find the right homes in your preferred area.
Let them know what you’re looking for in the house, what your budget is, and what you’re hoping to accomplish with the fix-and-flip project.
They’ll be able to help you find the perfect properties for your investment project. That said, you’ll need to find a real estate agent that understands the fix-and-flip industry.
Take your time and schedule consultations with several agents before you agree to work with one. You should feel comfortable discussing your needs with them and feel that the agent you choose understands what you’re looking for completely.
Apply for the Right Financing Options
It’s always a good idea to get pre-approved for a loan before you start looking at properties in earnest. This way, you’ll know exactly how much of a loan you’ll qualify for before you find a house that you want to buy.
Though you can use a traditional mortgage to buy a fixer-upper, you don’t have to. In fact, looking at dedicated fix and flip loans can help you get more money upfront and makes it easier to finance the cost of the repairs you plan to make.
Just remember to shop around and compare the quotes you receive from several lenders. You’ll want to choose the lender that offers you the largest loan at the most affordable interest rate. The only way to make sure you’re getting the best deal is to talk with different lenders and explore your options.
Negotiate With the Seller
When you’re planning on flipping a property, you always want to spend as little as you can on the purchase itself. This means you need to be ready to negotiate with the seller on the price.
As you tour the property, keep track of the repair issues you notice and estimate how much it will cost you to make those repairs. If you can, get the property inspected and use the inspection as a bargaining tool. Remember, every major repair issue is a potential way to decrease your purchase price.
Your real estate agent should be able to help you negotiate the sale. They’ll communicate your offers and any compromises you’re willing to make to the seller on your behalf.
Partner With a Seller’s Agent
Once you buy the property and make the right types of repairs, you’ll need to sell it as quickly as you can. Though it’s possible to sell the property on your own, it’s always easier to work with a seller’s agent.
In many cases, this agent can be the same realtor you worked with when buying the property. They’ll be able to help you market and show the property to prospective buyers so you can turn a profit fast.
Once you sell the property, you can use the profits to buy a new fixer-upper.
Now You Know How to Flip Houses Successfully
If you’ve been wondering about how to flip houses the right way, this guide should help you get started. Just make sure to take your time and choose the right house at the right price.
As long as you keep your bottom line in mind throughout the process, you’ll be able to make smart investments with every home you fix up.
Looking for more tips to help you become a savvy real estate investor or just want new ideas to help you diversify your income? Check out our latest posts.
