Flipping houses can yield significant results.
If done properly, an investor can make a substantial profit. But if not done correctly, it can lock up cash for an extended period of time or even lead to losses when it’s time to sell.
Does that sound like a huge risk?
Well, maybe.
Knowledge of the market, renovation experience, and cash on hand are all key components to successfully flipping residential real estate. And, if you have an eye for spotting good deals and a substantial renovation experience, you’re already halfway there.
When flipping houses, time is always of the essence.
Most flippers buy distressed or foreclosed properties before renovating it. They know, the better the deal, the stiffer will be the competition.
So if you are eying a property, it’s wise to have all of the pieces in place before making an offer.This will allow you to buy a house that’s priced below-market, fix it, and resell at a higher value.
According to data released by ATTOM Data Solutions in its 2018 home flipping report, investors saw an average return of 47.8% on their investments. This translates into an average gross flipping profit of $69,500 compared to the original acquisition price.
Hence, if you want to make a good profit on a relatively short-term investment, find a property in an area where real estate demand is high, the inventory prices are low, and distressed properties are abundant.
"When flipping houses, time is always of the essence."
Before you start fix-and-flipping, it is vital to learn how the industry works.
Start by asking yourself:
Survey the local market and identify the best neighborhoods for flipping houses. Usually, these are highly desirable places, with easy access to schools, transportation, and shopping. Scout for investment opportunities in areas with high demand and fast-moving real estate.
"Learn what aspects of a remodel will make your property more sellable."
It is essential to understand what home-buyers are looking. Learning what aspects of a remodel makes your property more sellable.
Also, research and analyze house flipping trends in different areas.
Know the taxes, fees, and compliances applicable in different towns and neighborhoods. Consult tax and financial experts to learn which property and investment laws apply to you.
After researching the location, examine your finances to determine how much you can comfortably afford to invest in real estate.
Before you do invest, examine your resources, and assess the risks involved. Finally, determine a budget for the renovation and all of its costs.
Draw up a business plan and analyze your projected cash flow.
Most importantly, decide whether you need to apply for a fix-and-flip loan.
Analyze your current financial situation to determine how much interest you can comfortably repay.
"When flipping a house, make an action plan, and analyze your projected cash flows."
Determine the types of loans you can get by checking your credit score. Then consult an experienced hard money lender or investment specialist to find the right option for you.
At Gauntlet Funding, we help borrowers develop a winning fix and flip strategies to help them build wealth through real estate investing.
Many people don’t have sufficient cash to start house flipping, and that’s why they seek a hard money lender to fund a flip.
A hard money lender provides faster turnaround than conventional lenders, such as banks. Also, the financial history of a borrower, including tax returns and income verification, are not as stringent with a hard money lender.
These lenders typically have extensive experience with financing a house flip. Hard money lenders further focus on the property as collateral, rather than the investor, and if conditions are right, they can close on the loan in a brief period of time – usually within 2-4 weeks. This helps in ensuring that you don’t lose out when the right property becomes available.
Since hard money loans have quicker approval times, they offer a faster financing alternative to traditional bank mortgages. The lenders are mainly concerned with borrower's equity in the property, cash reserves to make the monthly loan payments, and solid credit.
Gauntlet Funding provides a wide variety of hard money loans at competitive rates. Our quick and straightforward application approval process allows you fast access to funds so you can close deals as soon as possible.
Speak to our experienced financing consultants to identify the program best suited to your needs. For more information on hard money lending, contact us at 631-465-2161.
What is the Best Way to Make Money Flipping Houses?| Gauntlet Funding – Melville, NY
