Yes, you can flip a house without getting your hands dirty. But is it the best way to reap profits from your remodel?
Ever since the widespread exposure from television series and digital platforms, fixing and flipping houses has become a lucrative profession. However, many people fail to acknowledge the hard work and sweat that one needs to invest in making a substantial profit from flipping.
Most home flippers finance remodels from banks, financial institutions, and hard money lenders. According to data released by ATTOM Data Solutions on the fourth quarter of 2018 and year-end 2018, home flipping report, home flipping lending volume increased by 8 percent to an 11-year high.
That's big! You can quickly fix and flip a home for a profit even with a fix-and-flip loan.
Most experienced fixers and flippers start with a hands-on approach to remodeling. They gain firsthand knowledge about how things work, how much it is expected to cost, and where to cut costs without hurting your profitability.
So if you want to flip a house, don’t hesitate to roll up your sleeves and swing a hammer. Being handy around the house makes you familiar with the various intricacies of a home renovation.
If you’re actively involved in the restoration, you can put in extra hours when you need to meet a project deadline, or work flexible hours in case of adverse weather conditions.
Having said that, you don't necessarily need to be handy; but know a team of contractors or people who are. As you become better at hiring and coordinating with contractors, you develop the ability to spot a property with investment potential and flip it profitably.
"Home flipping lending volume has increased by 8% to an 11-year high."
You learn from your mistakes and often find creative ways to complete the renovation within the budget.
When flipping a house, you should emphasize buying low and reselling high. Similarly, as a flipper, you need to ensure you buy and sell property quick. The shorter the time between purchasing a house, then renovating it and finally reselling it, the more likely you are to make a big profit.
Sounds simple, right?
Well, if you want to flip a house, follow this 7-step process to profit:
Survey the local area and learn the real estate market rates in different regions. Understand what home buyers want and learn what sells a house.
Identify good neighborhoods and places with amenities like schools and medical facilities at a close distance. Know what aspects of a remodel add value to your property.
Make sure you're ready with cash so you can make a move as soon as you spot a good deal.
If you're not, when it comes to real estate investing, this can cost you an opportunity to make huge profits from a fix and flip.
Usually, you'll need to make a 20% down payment to secure the deal.
"You need to make a 20% down payment to secure the deal."
You need to have a keen eye and an instinct to know a good deal when you see one. Every good home flipper can tell when a property has excellent potential resale value.
Remember, the key to making a profit on a fix and flip is to buy a property at the least possible price. Negotiate, negotiate, negotiate. Yes, it needs repeating. Find the best price and enough time that not only helps in increasing your profit margin but also gives you a buffer-time on your remodel.
Get your credit score checked, to find suitable financing options. If you have bad credit or no credit or fail to qualify for a traditional loan, don’t lose heart. You can get funds from hard money lenders. All you have to do is apply for a fix-and-flip loan and get online pre-approval.
Follow the 70% rule to calculate how much you should invest in your remodel and still make a profit. Estimate how much work you need to put in to make the house sellable.
Identify the problem areas and any key additions you want to make to the property to increase the value of the home.
A good team is essential to any renovation. The team includes carpenters, electricians, interior designers, masons, painters, and plumbers.
Get trusted contractors and sub-contractors and vet them. Make sure your team is committed while you get good quality work.
Even if you don't sweat it out with the contractors, you still need to know about remodeling and flipping a house.
You should know the various local codes and regulatory frameworks for compliance. Have all the paperwork and approvals to go ahead with the renovation.
"You should know the various local codes and regulatory frameworks for compliance."
The aim is to get the highest bid for the property. It is usually recommended to hire a real estate agent to save time, money, and efforts. They know how best to stage a house to draw in investors and home buyers.
An excellent real estate agent can even help you negotiate a better price for your property. Remember, you will have to pay the original mortgage installments until you sell off the house.
Can I Profitably Flip a House Without Being Handy?| Gauntlet Funding – Melville, NY