Flipping houses for profit1 year ago
You may or may not be retired but you've got lots of free time, an excellent credit rating and a large amount of cash saved up, or equity in your home. What, you ask yourself, can you invest in that will bring a large return? Real estate, in particular the housing market, is a great place to start. If you want to make real money in the real estate market, then don't look at buying a house and then selling right away.
Some changes to that property will need to be made to get serious money and make it worthwhile for the expenses in closing costs and time.
Finding the right home will need to be one in a good neighbourhood but needs a bit of love. Whether it needs just a small update or has zero curb appeal even, time and money spent on turning a house from blah to fabulous will reap rewards by returning many times the investment you put into it in the first place. For a couple of months work you can possibly make tens of thousands of dollars in the first instance, or you might possibly make hundreds of thousands of dollars by sprucing up a home that was in true need of a bit of improvement.
What do you look for
Look for a home that could use some updating but isn't necessarily a fixer upper, and don't buy the most expensive house you can afford as this will seriously limit your budget when it comes to actually working on the home. Rather than buy the best from the outset, buy a house within your comfort zone. Bringing the value of the property as high as it will go should be your main focus.
Keep a goal in mind
Before you purchase the house you want imagine the changes you may wish to make. Are those changes within your allotted budget? A bigger kitchen may require tearing out a wall. Does the flooring need replacing? What about landscaping changes? New windows? Should lighting fixtures be updated? How about a sliding glass door in place of that window? While all these things will definitely improve the sale of the house, such measures can also be costly or difficult to do.
Be aware of your own ability to make these changes, if you do-it-yourself. Honestly assess whether you can do this flip alone or with some help. If the budget gets seriously strained, scaling back on the updated designs is what might be required.
Allowing extra in your budget
Regardless of how confident you are about your budgeting, home repairs have a nasty habit of incurring unpredictable issues and sometimes they can be expensive. You can prepare for the worst scenario by budgeting a plan that will not stretch your money resources too tightly. Then, should you drop a few pieces of that new kitchen tile, you can replace it without seeing, or going into, the red. Other things to keep in mind are things like food, for example. While you are flipping the house, you won't have time to leave the job site to prepare lunch, nor the energy at the end of the day to cook dinner for yourself. Unless you take packed lunches every day, remember to include money for lunch and, if renovating bathrooms, a portable toilet.
Make a plan and stick with it
The fastest way you can go over budget is by adding projects when you are well on your way with improvements. That new kitchen counter looks so good you may be tempted to improve things even more. If those improvements are not necessary, and they weren't in the original plan, don't do it. Save your new idea for the next flip. If you've done your homework, the original plan will be enough to substantially increase the sale price all by itself and you haven't gone overboard.
Include a real estate agent in your plan
Real estate agents in the area you wish to buy will usually assist in finding a good house to flip and what improvements would be suitable for your particular area. While a kitchen remodel may be what you've been thinking of doing, in some areas air conditioning may be worth a king's ransom if environmental conditions dictate. Maximize your profit in this real estate venture by matching the needs of your particular area to the design of the house.
There is a saying about the best laid plans. Regardless of how prepared and confident you are, little things will inevitably go wrong, costing you extra money or delaying your flip. Get ready for the job of a lifetime and expect the unexpected from your new house. A bit of hard work for a couple of months could reap you benefits lasting the whole year if you choose wisely.