The US’s medium home listing price is 11.8% higher this year than in 2021. So, it’s clear that home demand is still high, resulting in bidding wars. Higher home prices allow investors to cash in on high prices if they play their cards right.
Flipping houses is one opportunity real estate investors are taking advantage of. Flippers purchase homes, renovate them, then resell them for a higher price. But with such high demand, you have to find the right house and budget accordingly to make a profit.
If you want to learn how to start flipping houses, read on for five tips to get you off on the right foot.
1. Do Your Research
If you wonder how to find houses to flip, it takes more than just jumping on a property you think is a good deal and getting to work. You will need to research the neighborhood to understand what homes are selling for.
You’ll want to find homes that need a few renovations to keep costs low. You can get help from a real estate agent to determine a house’s worth and what it could sell for once you finish repairs. You should walk through the home with a contractor for an accurate estimate of repair costs.
2. Have a Trusted Team
You’re probably not going to do all the renovations yourself, so you will need to find the right people to get the work done. Your team will give you the best understanding of how to flip a house.
So build up a network of contractors and suppliers to cover the actual renovation work. If you send continuous work their way, they might discount you. A trusted team that does quality work and stays on the budget will lower your costs and boost your selling price.
3. Budget Wisely
Real estate investors follow a 70% rule when budgeting offers. Your maximum offer price should be 70% of your after-repair value minus renovation costs. So before you make an offer, you will need to estimate your renovation budget and final sale price.
You’ll want to focus on homes that don’t have structural issues that will drive up your costs when just starting. And you should stick to your renovation budget as much as possible, or you will cut into your profits.
4. Know How to Finance Your Project
One of the most challenging things for new flippers is figuring out how to flip houses with no money.
It can be challenging to get preapproval for a loan if the bank knows you are just flipping a home. But getting approval and moving quickly with your flip is vital to avoid interest payments that cut into your profits.
So if you don’t have the cash to purchase a home, you should search for short-term loans. Some companies will specialize in working with real estate investors and quickly get you the money you need. For example, you can find bridge loans for real estate investors to help you finance your flip.
5. Get Hands-On
When flipping, it helps to have some construction, business, or real estate experience since you can apply those skills to start your business successfully. Taking on some of the renovation work yourself will save you money.
Your hard work can give your business the momentum it needs to get off the ground.
Get Started Flipping Houses
Flipping houses can be an exciting and profitable business if you make smart investing decisions.
You have options for financing a flip, but you’ll want to stick to your budget as much as possible to maximize your profits. To set yourself up for success, be sure to do your homework and have an excellent team to help you finish a flip.
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