Tips to Know when Flipping a House
Thanks to eager investors and countless renovation shows, home flipping is more popular than ever before. Home flipping is a great way to take advantage of a hot market, or to make some spare cash, but anyone who’s ever flipped a home knows both the benefits and perils of flipping. Let’s learn 5 tips from flipping experts on how to get the most out of your next project.
There’s a lot of factors to consider when choosing a house to flip. Any house for flipping will need work, but you don’t want to be matched with a ‘lemon’ that’s going to cost you more in resources and energy than you expected. You want to purchase a house with great resale value but never pay more than the home is worth.
Always have a certified home inspector inspect any tentative properties so you don’t accidentally sink yourself into a project too big to handle.
Attempting a flip with a proper plan is asking for trouble. The longer the home sits, the costlier the deal will be for you. All home flippers should make an accurate plan of attack before they purchase the property. The plan should include the renovation plan, the purchase plan, which contractors you need to hire, the financing plan, and timetables for everything. A detailed plan will help keep you on track and normally results in higher profits.
House flippers can’t qualify for a conventional mortgage but there are options for secure financing and low risk. Home flippers should turn to short-term bridge financing or hard money lenders if they need cash for a flip. These types of loans normally require a larger down payment and charge higher interest rates, so get a few unique offers before choosing your financing.
It can be easy to overpay for a home’s potential but be smart with your money and never pay more than a property is worth, even if you feel you could score big later. Many flippers have gotten themselves in trouble by taking a gamble and overpaying only to have the home sit on the market.
You use step 2 to make time frames for your projects, but any flipper will tell you the most carefully laid plans often go awry, especially in the renovate and flip world. We get it, you can save money by doing repairs and items yourself instead of hiring a professional, but are you really saving anything?
Basic economics tells us time is money, so if a tile backsplash takes you 3 days but it’ll only take a professional a few hours – choose the professional! Do not be afraid to hire professionals for unfamiliar projects, it’ll cost you more in time but will pay for itself in energy.
By being smart about the project home you’re purchasing, making timetables, and securing the right financing you’ll get much more out of your flip. Flipping is a fun way to score some extra cash but only if you’re doing it the right way.