Beginner’s Guide to Flipping HousesOn January 15, 2021 by Rachel Howard
Flipping houses is a fantastic investment opportunity for those looking to shake up a lagging portfolio of assets. Many homeowners look for quick tips on how to flip a house for maximum profit, but the real money is in the long term benefits of continued property targets. Flipping one home will often net you a healthy profit, but once you’ve transitioned into a pattern of buying and reselling homes for profit, you will begin to see your investments explode with ever-increasing returns on investment. This is because the property market takes a dedication to research, just like the stock market or any other commodity trading.
Learning how to time the market and target the perfect properties for your strategy takes a long dedication to perfecting your craft, but with this commitment you can be sure to make a healthy profit that will carry you into retirement and beyond far more quickly than other investment opportunities can.
Start with the financial considerations.
After experiencing the thrill of victory within the stock market, many investors look to make the jump into the property market. Real estate is perhaps the best investment you can make to lock down long term wealth generating gains. But learning to tame the real estate market takes a different approach than stock trading. One great way to introduce yourself to the market movers trading with real estate, is through the use of REITs to boost your knowledge of property trends and moneymaking opportunities that branch out from them.
Learning all that you can before diving into the property market yourself is a great idea for investors looking to become home flippers. Research and experience are your means of success, helping you to sell a house fast during each of your real estate transactions.
One of the most important places to begin this journey of learning and financial freedom is through looking at the financials of the endeavor. To grow your portfolio and cash assets, you must first be tuned into the financial needs of your properties and the business of flipping homes itself. Real estate investors benefit greatly from the ability to borrow capital. Rather than relying on a large pool of savings, such as your stock market buys, you can leverage a mortgage loan from your financial institution to make a purchase and begin to collect revenue from properties before wholly owning the home itself. This relationship with banking institutions is of great benefit to real estate investors, but it means that you will have to be incredibly careful with the assets you target as a buyer. Any home that you purchase will begin to incur financial liabilities from the day you take possession. This means that the clock is ticking on your return from the moment you sign the documents and take the keys.
Home flippers often like to lock down short term loans with a ramped payment structure. These give the greatest benefit to an owner who is looking to hold the home for a few weeks or months before selling it again at a higher sale price. Working toward the lowest out of pocket payment structure is your best friend as an investor engaged with the property market. The equity of the home will pay off the mortgage automatically once you turn a potential buyer into a closed deal, so keeping hold of your personal cash is a big deal for investors looking to create high quality returns. The devil is in the details, so make sure that you fully understand the entire financial picture before jumping into the property market.
Target specific renovations for maximum impact.
Homeowners love renovation projects. Americans spend over $400 billion each year on renovations and home improvement projects, so anyone buying a home will be looking at it for its current qualities as well as its utilities with some alterations or additions. Because of this trend in homeownership within the United States, buyers looking to flip fixer uppers will need to target homes with low price tags and a space that screams for beautification. Often, flippers find the best deals among foreclosure properties. These are homes that have been taken over by the bank, and are sold at a discount to recover a portion of the mortgage investment. Foreclosure is a messy business, and so many homes sold like this are beaten up or require significant maintenance to get them market ready.
Foreclosures offer a uniquely discounted sale price however, and they hold incredible potential for investors in the space, like you.
To make the greatest return on your investment, you should target homes that require minimal upgrades, but don’t be afraid to purchase a property that you can really dig into. Looking into the condition of the roof and HVAC unit is often a great way to explore the overall state of disrepair that a home may have fallen into. If these are still in good working order then simple cosmetic improvements may be all that’s required to transform the space into a cash building opportunity. Home window replacement in Hickory is also an important update to an older home. New windows attract potential buyers like few other improvements. These inclusions improve energy efficiency, keep the home warm during the winter and protected during the seasonal storms that frequent your particular slice of the U.S.
Similarly, the kitchen is a prime location for updates. Flippers make great returns on a modern kitchen, and even beginners of the asset class can install a new stove, or sand and repaint the cabinets for a classic look. Once you’ve completed these essential updates, all that’s left is to list the property. Utilizing online photo storage sites can help you quickly snap all your pictures of the home and upload them through a mobile app. Rather than saving them on your hard drive, pictures uploaded and stored within cloud storage are easily accessible and can be shared with your realtor or listing page from any device, at any time.
Transitioning into house flipping is a great way forward for many investors. Get your start within this unique asset class now.