Whenever people are talking about real estate investments, flipping houses is always brought up. The reason is simple: flipping houses are profitable, reliable, and exciting. So it’s not surprising that many people who have never invested in real estate before are trying to flip houses.
In this article, we are going to talk about just that. How do beginners should flip houses to maximize their profits? Let’s learn more about it.
Find the right market
Finding the right market for you should be the first thing to do. Buying and renovating a house before selling it won’t guarantee that you will find a buyer. But, if you learned and got to know the market before you buy, you will know exactly when and how much you can sell a house.
This is due to how each area in your country is different from one another. Some areas are going to be within your scope, while other areas aren’t. This is normal, and you must adjust accordingly. Try to venture far away from your local area, let’s say an hour or two, then you might be able to find a different market that might suit you better.
Driving around the neighborhood of your future properties is also important, finding helpful real estate seller leads is also recommended. That way you can familiarize yourself with the area and calculate based on your findings whether you should pull the trigger or not.
Create a budget
Buying a house is only one step in flipping a house. Next, you must repair it to maximize your profit, but how much money should you spend on both purchase and repairs? To answer that it is time to set up a budget first.
It is always recommended to buy a house in cash to avoid mortgage applications and the approval process. This is also more attractive for potential buyers. But, some flippers also need financing and you can do so if you need to.
Now, after you are set with a budget for the purchase, you can set up a budget for repairs. Keep in mind that repairs can be unexpected. Some damages here and there that you didn’t know or overlook, or perhaps some additional repairs and modifications are required before you can sell the house.
House repairs costs are tied closely to how much you can sell the house for. So it’d be a great idea to think about it first. Try to aim for the lower end of comparable sales prices so you won’t be in the red.
Market the house
Your hard work would go to waste if you don’t market the house. Keep in mind that you might want to sell the house as possible as the maintenance costs could eat at your profit. So as soon as you are with the repairs and everything is looking good and liveable, it’s time to market the house.
If you have your own real estate network, then you should market the house there. Otherwise, there are many other platforms that you can use. But, many house flippers who do this for a living always build relations with real estate investors, rental properties, and home buyers. These people are always on the lookout for new properties and they might buy your new house.
Other platforms such as social media, newspapers, and real estate websites are also great. Most of them can be used for free and you can do it yourself too. Take as many pictures as possible so everyone can see the house and write concise captions for all the pictures.
Negotiate the sale price with buyers
Negotiation is always happening in the world of real estate, that’s why real estate agents are always busy. This is especially important when you’re dealing with experienced real estate investors. They will know exactly how much the house is worth in the local market, so you must be prepared. First-time home buyers, however, will be much easier to negotiate with.
Being a house flipper is exciting I must say. The process can be overwhelming but once you get the hang of it, hunting for new properties, negotiating with people, and calculating budgets can be interesting and fun.