- The market is now stronger and better than it has been for many years. Meaning, it's time to take house flipping off the shelf and put it back in action. But, there are some things you should be aware of before starting this endeavor. Remember, you need to spend money to make money. So when you start out in real estate and purchase your first buy-to-sell house, you will find yourself cash poor. But this is actually okay. Because, in the grand scheme of things, you’ll actually be making more money than you realize. You may not see it right away, but keep your eyes on the goal and it will be worth it in the end.
- One thing we don't suggest you do, when it comes to house flipping, is to buy a house and then rent it out. This will leave your bank account extremely strained, especially if you're just starting out. Instead go for the flip. (Unless of course you have several properties already under your belt, and then maybe renting can be a more viable option.) We understand the appeal of having a monthly income, but for first-time investors it doesn't seem to make much sense. The other thing we don't suggest doing when it comes to flipping is, buying a house and then waiting to see if the markets change and selling it at a greater profit. This is high risk and is very tricky unless you are a real estate guru who can read the markets better than Einstein can do math.
- Instead, we suggest focusing on the smart buy. Meaning, a house that is smaller, in somewhat decent condition that is in a good location. Because it doesn't matter how nice the outside is, if the location isn't right, you'll never get the money out of it that you put into it. So, look for houses in good areas that have been on the market for a long time. More than likely if it's been on the market for a while you'll be able to get a better deal from the seller. If you are a first time buyer, we don’t suggest going for the big house flip. Cheaper houses are often more profitable to flip than a large house. One, they are easier to fix up. And two, you'll have more money in your pocket for renovation.
- Once you have found your home that you want to fix up and flip, it’s now time to strategize how you’re going to fix up the house. This includes trying to figure out how you're going to increase the value of the house. You can do this by:
Adding square footage
Changing floor plans
Adding bedrooms and/or bathrooms
Any one of these renovations can take a $60,000 valued home and easily bump it up to $200,000 home. It may be more work and take more time, but the end result means more money. Trust us when we say it is well worth the investment.
Also, never forget that it is okay to be cash poor at times. In fact, this is actually a great motivation tool to keep you striving for your goal and keep you from spending money that you don't have. In fact, one way you can learn how to save money is by learning how to do things yourself. If you learn how to plaster walls, tile a bathroom, or install basic electrics, these skills can help you keep your costs lower. Further adding to the value of your investment.
- Once you’re finished with the renovations and your house is ready to be sold, you’ll need to shift your focus on marketing your home to be purchased. There are several ways you can do this. One is by enlisting the help of a real estate agent, which is always a good idea. Another idea is to list the house on several real estate websites. If you do this we suggest using a tool called real estate virtual tours. Real estate virtual tours allow you to show a live 360 view of your home. This helps people to see what you have the offer before even needing to come in for a showing. Which cuts down on the amount of people who aren’t serious buyers. Saving you time and money.
In conclusion, house flipping will always be a gamble. But if you'd do your research and learn how to flip a house the right way, you can see amazing results and wind up with more cash than you know what to do with.