What is House Flipping?
Flipping a house is the process of buying a property in its current condition, making renovations to it, and then selling it for a profit to get a better return on the investment. It is a lucrative business that has helped many people earn a living. If you are looking for a way to earn income without working a traditional 9-5 job all the time, you might want to get involved in the house-flipping industry. Flipping houses is something that many entrepreneurs do to earn a huge profit on a property.
How Can You Make a Profit From Flipping Homes?
Buying distressed houses is a way to make a profit from flipping homes because these properties are sometimes listed on the market at low prices. These homes are listed at lower prices than the average value of a home in that specific area for one of several reasons, including:
- The home is getting ready to go into foreclosure because the owners cannot afford their mortgage payments
- The owners have been unable to keep up with maintenance and renovations over the years
- The home was inherited by children, grandchildren or other relatives that want to sell it quickly because they have no intentions of living in it or using it
- The property is falling apart and those who live in it do not have the money to pay for all the necessary repairs
Of course, the process of finding these affordable homes does take some time, research, and effort. However, those that are already in the industry have experience with finding affordable homes, buying them, and doing what it takes to drastically improve those properties to get potential buyers to spend more of their money.
Can You Flip Without Substantial Funds?
If you do not have a lot of extra money set aside to invest in a home, you might think that the house-flipping business is not for you. Many people make the mistake of assuming that only rich investors can get in on this industry, but that is entirely untrue. Even if you do not have a lot of available funds to use on investment property, you can still end up buying one of these homes. You would simply need to apply for a loan with a banking institution. If you have good credit, a secure job, and a steady income coming in, getting approved for the loan to use on an investment home is not as difficult as most people assume. Once you have the loan, you can use it to invest in affordable homes that you can renovate and sell for a larger profit. You would have no problem with paying off the amount that you have borrowed and keeping the rest of the money as your profit.
How to Get Started Flipping Homes
When you want to get started in the house-flipping industry, there are certain things you will need to know. It all begins with creating your business plan. Having a business plan created before getting started is the best way for you to keep things organized. It is also the best way for you to have the most success with your new venture. So, how exactly do you create a house-flipping business plan that works to your advantage? If you are not too sure, these are some of the things you should include in your business plan:
- How you plan on securing the funds needed to invest in a property
- Where you plan on looking for good investment homes
- How you are going to research the real estate market in specific areas
- What types of contractors you will need to hire to help with renovations
- What types of renovations you can handle yourself, such as painting and cleaning different parts of the property
These are only some of the things that you should include in your business plan. Anything of importance that relates to you flipping a house is something you should include in your plan. You would need to do some research beforehand and you would need to have access to different resources and professionals that can help you along the way. If you take the time to create your business plan, you will not end up being disappointed.
Choosing the Right Home to Invest In
When you are going to start searching for a home to invest in, you need to consider some important factors. Ask yourself the following questions before you ever invest any money into a property:
- Are people currently buying homes in this area?
- How far is the home from stores, schools, parks, and other important places?
- Is there a public transportation system in the area?
- How long would a commute be for most people that likely work in the city?
- What is the crime rate like in the area?
- How much, on average, do homes currently sell for?
- What types of renovations will I need to make to transform this home and how much will those renovations cost?
- What kind of condition is the home currently in and has it been maintained well enough over the years?
Some people have no problem purchasing an investment property that is in poor condition because they plan to give the property a complete makeover by handling assorted renovations. However, others may prefer doing less work. It all depends on how much work you are willing to put into a home. If you plan on transforming the property from top to bottom, you might not care if the home is in poor condition and has not been maintained, especially if you can get the home for a much lower price than most of the homes that are for sale in that area.
It helps to invest in a home where the market is hot. If you are buying a home in an area where people are not currently looking to purchase a property, you could complete renovations and completely transform the property, but you might end up waiting a long time to find a buyer. If you invest in a home in an area where people are buying homes quite often, you can sell the property within weeks of finishing the renovations. Most investors want to sell quickly because that means they can pay their loan off in time and still have plenty of money remaining to keep for themselves.
Flipping Houses As A Career?
When you are hardworking and dedicated to getting the job done, the house-flipping industry is not a bad industry to get involved in and yes you can make a career out of it. You can flip homes for a living, make thousands of dollars, and have success without having to work a traditional day job. However, flipping homes is not for everyone. If you are not willing to do the research or willing to create a business plan, you could have a difficult time with it. Those that get involved in this industry are motivated entrepreneurs looking to make decent money.
Now that you know more about the house-flipping industry, you can decide if it is the kind of industry that you would like to get involved in. If the thought of investing in a cheap property, transforming it by completing renovations, and selling it at a higher price to make money excites you and is something you look forward to, you should start creating your business plan now.