Flipping houses for profit is more common than you may think. Believe it or not, as many as 5.7% of all home sales are for flips!
If you’re looking to diversify your investments and get your hands a little dirty, then this may be the perfect opportunity for you to turn a quick profit. However, you still need to know how to do it. Let’s talk about some of the benefits of flipping homes and how you can get started today!
Why Flipping a House Is So Profitable
Flipping homes is one of the most popular real estate investments around, and for good reason. All you have to do is find the right property, invest in home renovations, and resell for a quick profit. This is often more appealing than slow, steady rental checks for many investors.
Of course, there are plenty of risks associated with flipping homes, but they are relatively secure compared to other investments. Since it’s a “one and done” deal, there’s limited time for dramatic market fluctuations. As long as you calculate the estimated costs of renovations with the local market, it’s a reasonably safe bet.
For example, if you buy a fixer-upper for $75,000 in a town where homes go for $300,000 on average, there’s a potentially large profit margin within that difference. Barring any serious structural damage, limiting repair costs to under $100,000 could potentially earn you a $100,000 profit after all costs, fees, and taxes.
How to Start Flipping Homes
Now that you know why it’s such a popular investment, you’re probably interested in earning your share of the profits. Let’s talk about how to flip a house in 2022!
1. Find the Right Building
Even though you’re investing in a fixer-upper (or because you are), you will need a thorough inspection of the property. You need to know that the building is salvageable and that repairs are manageable. If there is serious structural damage to the property, then it may not be worth the investment.
Also, remember the importance of location. Look for buildings that are near significant landmarks where people would want to own or rent a home. Easy access to public transportation stops, schools, and downtown areas are great ways to help speed up and maximize a sale.
2. Get the Right Loans
Real estate is a unique investment because you don’t need to invest all that much to get started, and there’s no limit to how much you can grow. In many cases, you won’t even need to save up for a down payment if you can find the right loans.
Some loans are even specifically designed for house flips so you won’t be stuck with a 30-year mortgage and penalties for paying it too soon. This way, you can buy the house, put in the necessary repairs, pay it off right away, and keep your profits. For more information, go to constructionspecloans.com
3. Do Some of the Work
If you’re handy, you can save a lot of money on repairs by doing work yourself. If you find that there’s any work you can feasibly do on your own (without risk), then feel free! Labor costs are a significant portion of a construction bill, so the more you can do on your own, the more profit you’ll earn.
There are always minor things that anybody can do, including landscaping, painting, and more. Even if you’re only pitching in a little, it will still save you money.
4. Find the Right Construction Team
Construction isn’t cheap, which is why it’s best to shop around until you find the right team for the job. Once you find the best deal, you can get to work.
Also, cheaper doesn’t always mean better. Ask for references or verify their business through online reviews to ensure they’re legit and can offer the services you need. The last thing you want is to pay someone else to fix their work or bring the building up to code.
We recommend finding a construction team before buying the property. Have them take a look at the house and the inspection results so you can get an estimate of the renovation costs. Comparing this to the market in-town could help you prevent making a bad decision!
5. Consider Renting the Property
Once you have the property, it may make more sense in the long-term to rent it out, depending on the term of your loan. You’ll always be able to resell the property later on, and maybe for a higher price with existing tenants. This is a good way to get the most out of your investment, but it isn’t for everyone!
If you’re interested in crunching the numbers, feel free to use a rental property calculator to see how much you could earn.
6. Market the Property
Once everything is up to code and ready for sale (or rent), find the right agent and list the property right away. This whole process likely took months, but this part doesn’t have to. Make it clear that you’re a motivated seller and list your building on every website you can until you find a buyer willing to pay the right price!
Once you have that, you can close, repay the loans, and enjoy your profits. Remember, those profits can always act as a down payment for a second house flip!
Go Flippin’ Crazy
Now that you know how to start flipping homes for profit, grab your tools and get to work! Flipping houses is a time-tested investment with potentially high (and instant) payouts. Consider it for your next investment and stay up to date with our latest financial tips!