How to Avoid Flopping When Flipping Houses
House flipping is a form of real estate investment in which properties are purchased not for personal use but resale. The objective is to buy properties at low prices, make necessary renovations, and then sell them at considerably higher prices. Since holding onto them is expensive, house flippers generally focus on reselling properties quickly. Here are some details to keep in mind so you can avoid mistakes that many beginners in house flipping make.
Have Sufficient Funding
House flipping can be an expensive investment enterprise. Firstly, there is the acquisition cost of the property. If you have financed the acquisition, you will also be paying interest on a loan. You also need to consider the cost of any necessary renovations. Take the time to research your options for financing, and be sure you can afford to bring your real estate venture to its conclusion.
Remember the Time Commitment
To renovate and flip houses takes not only funding but also a considerable amount of time. You need to find the right property, fix it up, have it pass building code inspections, and then locate a buyer. Be sure you have the time you need to commit to house flipping.
Develop the Expertise and Skills
House flippers need to have enough practical knowledge to discover suitable properties in prime locations for low prices. Even if you acquire the right property, you have to know what kind of renovations are needed to make the property marketable at a profit. If you are skilled in carpentry, plumbing, and other necessary skills, you may be able to do much of the renovations yourself. Otherwise keep in mind that you’ll have to hire professionals, which will cut into your profit.
Professional house flippers realize that it takes time to find the right properties, renovate them, and then sell them. On the other hand, newcomers to house flipping often hastily purchase the first property they come across, hire inefficient contractors to fix it up, and pay exorbitant commissions to agents to help them sell it. Instead, you need to have the patience to locate the right property, hire skillful contractors, and if possible sell the house yourself to maximize profits.
For more advice on house flipping, contact Summit Commercial Capital.