If you were to only watch a few television shows about flipping homes, you would think this is a simple process for making a tremendous amount of money. The problem is that too many people jump in without doing some research, and lose all the money they invest when they could have easily turned a nice profit had they taken the time to learn more about house flipping like Than Merrill. Here are some important things you need to know about flipping homes.
1. Getting educated
Before you want to spend your money on a piece of investment property, you really need to stop and get familiar with all the nuances of the real estate market. This means researching the locations, the buying habits of customers, as especially analyzing the neighborhoods. The key is selling fast, so don’t look at how an area will be years from now, you need to understand all the specifics of the location today and how they affect homeowners.
2. Looking For a Mentor
If you know of a person flipping houses in your state, ask them if they would take time to be your mentor. Offer a small percentage of your first sale in exchange for spending some time with them as they work on all the details of buying and selling a home quickly. The people on television flipping homes make it look easy, they do not show you all the hours of work that go into finding those homes. You can gain invaluable information working with someone who has experience flipping homes.
3. Analyzing Listings & Foreclosures
Make use of different online tools that will give you access to listings, including foreclosures that are currently on the market. Many of these programs will provide you information you need to know, like the house history, the repair history, and if remodeling or additional work has been completed at any time to the house. By being able to tell if the structure of the house or appliances are older than they appear in the listing, you can use that bargaining power to negotiate a cheaper purchase price.
4. Understanding How to Make the Offer
Understand that if the home you are making an offer on is priced to sell, you are going to have some competition looking to steal the house as well. There are people who do house flipping full-time, so you need to quietly sneak by the competition by choosing to go door-to-door when making offers. Before making that offer, you should already understand the estimate needed to make repairs, interest, taxes, and still make a profit. Better to make a profit than bid too high and risk losing money.
5. Fixing the House
You are going to need to develop relationships with different contractors who specialize in different projects. Once you apply for the permits to begin work, find a contractor who has history of excellent work and is available for jobs on a regular basis. When it comes to flipping houses, the faster the house is flipped, the bigger your profit. Explain this to the contractors so they understand how important the time is during a repair.
Once you have a good understanding of the market, you will get better at pricing the home to sell. Remember, any profit is better than a loss, so avoid trying to sell too high by letting the house sit stale on the market.