5 Necessary Steps to Flipping a House
Thanks to the popular reality TV shows that feature house flippers who make nearly $50,000 in just a few weeks, house flipping has become more and more popular. There’s nothing wrong with the profession--it’s lucrative, honest, and helps a lot of people find their dream homes (since you’ve helped to fix it up for them). The only problem is that you have to be able to do the job right. You can’t go into it expected to paint the walls and sell the home for a million dollars. House flipping can take a lot of research and hard work. To help, here’s what you need to know in order to flip a house in 5 main steps.
1. Research the Real Estate Market
Not every market is the best choice for flipping houses. For example, if you’re starting off with just $10,000 that you can work with out of pocket, you probably shouldn’t start flipping houses that are being listed in the millions. It won’t work out well for you and you’ll end up with less than you started with. The general rule of house flipping is the less cash you have to work with, the less the house should cost overall. That means that the first two questions that you need to answer are:
• How much cash are you starting off with?
• What market can you afford to work with?
You need to know where the neighborhood that you’re planning on working with sits on the scale of A to D. A neighborhood that is classified as “A” means that the homes are wealthier. A “D” neighborhood would be considered poorer and definitely working class. All neighborhoods have their benefits and their challenges, so learn about your market before you buy a home to do your first house flip.
2. Set a Budget and a Plan
You’d be setting yourself up for failure if you went into this without a real plan. It doesn’t have to be fancy or crazy, or even super in-depth. You need to know how much you’ll think the flip is going to cost you and how much you’re going to make off of it. Also, make sure that you’re never buying anything that has major problems that you won’t be able to fix within your budget. For your first house, you want something that you can flip fast and easy.
3. Find the Right House
The next thing that you need to do is to find the right house to start your work on. Again, this is where the neighborhood classifications comes into play. You need to find a home that fits into your budget without any major complications. Do your research about the home first as well. Make sure that the house is structurally sound, has no infestations, and no mold issues. Everything you’re doing is going to feel like a numbers again, and it is. You need to find a house that’s high enough to let you still make money off of it. And low enough that you’ll be comfortable with the price that you’ll be spending.
Here comes the part that you were expecting: the renovation. This is one of the most important parts of the process. You’ll be on the clock working on the house all day and into the night since the faster you can flip the house, the more you’ll make. Add features that make the house feel homey. Add a skim coat to the walls to make everything last longer and to give it an appearance of quality. Every month that you spend working on the house you’ll lose money. You have to pay to taxes, bills, and insurance. Because of all of that, try to finish the home as soon as possible.
5. Get Ready to Sell
The final step of the process is thankfully the easiest. All you have to do now is sit back and get ready to sell the home. It’s up to you to set the price that you want to sell it at. You want to sell it low enough to make sure that the house is relative in the market, and high enough that you’ll still make money off the process.
Once you’ve done that, you can move on to bigger and better projects.
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