These days, a growing number of people are turning to flipping houses, either as a side project or as their main form of income. This is the process of buying a house with the intention of fixing it up and selling it for a profit. There are a few steps that you’ll need to take in order to be successful at this.
Determine Your Budget
The amount of money you have to use or the amount you think you can get from a loan are your two prime concerns when it comes to determining your budget for flipping houses. It should be noted that no one is able to get a conventional mortgage if they intend to use the money for house flipping. Until you have determined your budget, it is not wise to start searching for houses.
Research Housing Markets
Before you start searching it’s smart to research the housing markets in your area. When you want to flip houses, your best bets are to purchase homes owned by a bank, distressed properties, and those that are in foreclosure. For this reason, you’ll want to focus your search on areas where very few new houses are being built, if any at all. Properties that are aged and/or neglected are the best investments a house flipper can make.
Analyze The Potential For Profits
At this point in the process, you will want to analyze the houses in your chosen market. You can do this by finding out how much money houses in a certain market are sold for, on average. To make a profit flipping a house, you’ll need to purchase it at less than the market value it has. It is also important to factor in how much you think the needed repairs will cost. While you’re at it, remember to calculate the expected value of the house after repairs are completed.
When approaching a seller, work to negotiate a price with them that will net you a profit. It’s always best to have in mind the highest price you are willing to pay for a house. If the owner declines, move on to the next candidate.
For more information on flipping houses, please contact Park Cedar Commercial Lending.