Property is intrinsically linked to wealth. There’s a good chance most of your family’s net worth stems from the residential home. Businesses have made immense profits from repairing, selling, buying or renting out places to live. But could you actually make a decent profit flipping houses?
Here’s what you need to know:
House flipping is a pretty simple business. You look out for houses that are being sold cheap, buy them, maybe repair them and then sell at a profit. Usually the whole cycle takes a few months to complete. The trick is to get the lowest possible price on property and repair it efficiently. If you can keep costs low while repairing and time the market properly, you could end up with a decent profit for your efforts.
Right now might be a great time to start since there are plenty of home auctioned off every year. Homeowners lose their property because of mortgage defaults. These properties are listed at a discount and that’s where you can get a house on discount.
What you need to get started.
For start, you need a lot of capital to place a down payment on a house. A good credit history and enough of capital will help you get prime property while cutting interest rates. Next, you need to do your research and scout for the best locations. The trick is to get the worst house on the best street. Don’t underestimate the importance of a good location. Look for a school district with good amenities and public transport connectivity. Once you buy yourself a property at a bargain price, your profit margin depends on how much you can suppress the costs of repairs. If you can repair the pipes, the wiring and toilets efficiently, you can save money on making the house habitable for the next owner. A lot of the profits from house flipping stem from sweat equity. If you can do a lot of the DIY repairs yourself, you will widen the profit margin.
House flipping isn’t easy, but if you could get better at it with time. The tedious process becomes a lot easier if you focus on the essentials, do your homework, find a mentor to guide you and sell quickly at the end.
House flipping is a tedious, time-consuming process. So it makes sense to speed things along while selling. If you can sell your property quickly to an institutional buyer for a fair price you’ll be able to repeat the cycle again for more profits. “I usually want to sell my house quickly so I can move onto the next project,” says one experienced house flipper.
A lot of professional house flippers have years of experience and know how to extract profit from their investments quickly. Over time you too will develop a network of support and learn the ropes of the game. It’s okay to make minor mistakes initially, but don’t let it get you down. Everyone has to start somewhere.