Flipping (or called wholesale real estate investing) is a type of real estate investment strategy in which an investor purchases a property not to use, but with the intention of selling it for a profit. In simple terms, you want to buy low and sell high (just like many other investments).
Research your financing options extensively to determine which mortgage type best suits your needs and find a lender that offers low interest rates. Of course, paying cash for the property eliminates the cost of interest, but even then there are property holding costs and opportunity costs for tying up your cash. The first expense is the property acquisition cost. While low/no money down financing claims abound, finding these deals from a legitimate vendor is easier said than done. Also, if you’re financing the acquisition, that means you’re paying interest.
Renovating and flipping houses is a time-consuming business venture. It can take months to find and buy the right property. Once you own the house, you’ll need to invest time to fix it up. If you have a day job, time spent on demolition and construction can translate into lots of lost evening and weekends. Once the work is done, you’ll need to schedule inspections to make sure the property complies with applicable building codes before you can sell it. If it doesn’t, you need to spend more time and money to bring it up to par. Next, you’ll need to invest time to sell the property. If you show it to prospective buyers yourself, you’ll spend plenty of time commuting to and from the property and in meetings.
If you’re handy with a hammer, enjoy laying carpet, can hang drywall, roof a house and install a kitchen sink, you’ve got the skills to flip a house. Otherwise, you will need to hire professional builders and skilled professionals, such as carpenters and plumbers, They have the knowledge, skills and experience to find and fix a house, but they are also expensive, the good ones. Taking the lowest bid can cost you thousands in the end. This is one of the toughest parts of getting into real estate. You need to do your homework.
To be successful, you need to be able to pick the right property, in the right location, at the right price. Even if you get the deal of a lifetime, snapping up a house in foreclosure, say – you need to know which renovations to make and which to skip. You also need to understand the applicable tax laws and zoning laws, and know when to cut your losses and get out before your project becomes a money pit.
Professionals take their time and wait for the right property. Novices rush out to buy the first house that they see. Then they hire the first contractor that makes a bid to address work they can’t do themselves. Professionals either do the work themselves or rely on a network of pre-arranged, reliable contractors. Professionals understand that buying and selling houses takes time and that the profit margins are sometimes slim.
Remember, when flipping houses, it’s important to know which improvements to make and the areas to focus on. Be sure you only fix what is necessary, and work within your budget. There is a possibility that you will lose a sale due to under-improving a property and increase your cost due to over-improvement. Make sure that you are aware of the necessary renovations and repairs to make, as well as the upcoming industry trends and interview GOOD CONTRACTORS. To better understand other topics on makes a house flipping a flop, feel free to contact us at CPDHomes thru our line @ 216-282-4332. Visit our website for more of our services at www.cpdhomes.com. We will be more than happy to assist you!