5 Tips on Buying a Home to Flip (Part 1)
For most people, there are two reasons to buy a house. Either you want to live in it or you want to rent it for passive income. However, there’s a lot more to the housing market than meets the eye. Besides the teeming undercurrent of auctions, estate sales, private deals, and opportunism is a special part of the real estate ecosystem known as flipping. Flipping is a unique form of residential investment property ownership in which the buyers select one shabby house at a time to renovate and upgrade into a cozy modern home any family would be happy to live in.
What the flippers get out of the deal is the profits from buying an unwanted home at a low price and selling it for much more after renovations. The market, on the other hand, gets a steady supply of homes returning to the market after some time spent in disrepair. If you’re considering joining the noble (and profitable) project of home flipping, here are five useful tips to help you get started.
1) The Double Investment
The first thing to remember when considering a flip is that you are planning to make a double investment. First, you will need to attain a mortgage for the home, something that may be challenging if the value of the property is too low. Second, most home flips require several thousand dollars in renovations before they’re fit to sell to a new family. Therefore you will either need to have the investment on-hand or obtain a private loan that will be paid back with some of your profits from the sale.
2) Finding Easy Flips
Your next challenge is to find a profitable flip. This is a more complex task than you may think. Your primary goal is to find homes that look bad on the outside but are still perfectly sturdy, secure, and weather-sealed otherwise. Shabby homes that have fallen into disrepair but have not yet begun to decay are usually your best bet. Keep an eye out for anything that mostly needs a little landscaping, a coat of paint, and a few basic repairs to experience the transformation from crummy to cozy. There are usually a few of these in every city just waiting to be returned to the housing market.
Flipping homes is an incredibly exciting investment, especially if you’re handy with a hammer and paintbrush and have an eye for potential in a rundown home. Want to see our other three tips? Join us next time for the second half of this two-part article where we’ll talk about the living situation, personal touches, and passing the flip on to a new owner. For more great real estate tips and tricks, contact us today!
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