If house-flipping has been calling your name but you’re unsure how to begin, worry not. Money Buffalo is a wonderful resource if you’re looking for passive income and investment tips, including real estate investing, so make sure to explore the blog.
Although details can vary, these simple, smart steps can get you off to a solid start on this new venture.
1. Know Your Market
To successfully flip a house, you have to choose the right home in the right area. This means researching the market to check on available homes, recent sales, selling prices, and popular features.
What is attractive in one town might not be appealing in another, so develop a good understanding of what buyers in your specific area are looking for.
Your research also reveals what you can let slide when making improvements. Remember that house-flipping is all about the bottom line.
If all of the houses are selling despite popcorn ceilings, for instance, then there is no reason to replace those on your investment properties unless doing so significantly increases your profit. Building familiarity with your market and getting ideas of what will and won’t be necessary for a successful sale allows you to flip efficiently and quickly.
2. Get Funded
For those with cash reserves, this isn’t a problem. You can often pick up houses at auction for less than on the market — though they can sometimes come with their own issues. Those who need outside funding usually have two possibilities: get an investor or take out a hard money loan.
If you’re looking to turn your house-flipping into a serious business, investors can be a smart path to take. Although these can be people you know or locals in the area, many options exist online to connect you with individuals looking to invest in sound business ideas.
Hard money loans are another popular option. According to Rocket Mortgage, with hard money loans, lenders don’t base approval solely on your creditworthiness. Instead, they use the investment property you are purchasing as collateral.
If anything goes sideways, the bank gets the money back by simply selling the property. Although these have steeper interest rates than typical loans, they are short-termed since you only pay on them during the time you are flipping the house.
3. Delegate Difficult Tasks
Although it can be tempting to try and do everything yourself, that doesn’t always make the most financial sense. Time is money when it comes to flipping houses. Every month your name is on the property, you are losing money in interest, utility bills, and other payments.
Objectively assess your personal skills to determine the best places to invest your own time, and hire others to do work you are less familiar with or unable to complete.
This does not just apply to contractors. If you have others working for you, you can outsource payroll duties by using an online service.
Many of these services charge a flat rate per person on the payroll, which makes this a great option for someone employing just a few individuals.
Research various apps and solutions to find a good fit. Look for options that allow you to set payroll to run automatically so your workers never miss a payment. Ideal services should also offer features like automated taxes and tax penalty protection.
Flipping houses is a great way to earn money in your later years when you have the right knowledge and experience. Know your market, find options for funding, and learn to delegate. You’ll be on your way to home-flipping success in no time.