You’ve seen them on TV and in movies – people flipping houses for a profit. The risks seem low, the gains seem high, and it’s an easy way to get into real estate investing. Perhaps you’ve been looking at home listings and getting inspired? But before you take the plunge into house flipping, be sure that you know what you’re getting yourself into. Here are five things to consider before deciding to flip a house:
1. How Much Money Do You Have?
Understand that house flipping is a business; you are making an investment. Is your capital available without hardship or restriction on spending? Are there other demands on it, such as children in college?
Can you get a loan if you don’t have the cash on hand? Flipping houses is a high-risk investment. Bank lenders will be looking for a substantial down payment, proof of income, and the potential to recoup their investment. You could also consider approaching a hard money lender for a loan. Hard money lenders offer loans to people who don’t meet the qualifications of a bank.
2. Are You Willing To Put In Long Hours?
Flipping houses can be a time-consuming process. You’ll likely need to spend many hours each week on the property, from finding and assessing properties to doing repairs to marketing it for sale or rent, depending on your long-term goals. So be prepared to work hard if you want to succeed in flipping houses.
3. What Is Your Experience With Construction Work?
If you’re not experienced in home construction, it’s essential to factor the cost of hiring a contractor into your equation. Many inexperienced flippers underestimate the time and money it takes to flip a house. Factor in permits, inspections, materials, and labor costs when budgeting for your project.
It might be wise to consult with a contractor before you purchase a property to estimate the work that needs to be done. This can help you avoid costly surprises down the road.
4. Can You Find Enough Properties At A Reasonable Price Point?
One of the critical aspects of flipping houses is buying low and selling high. This means you need to find suitable properties at a reasonable price. Finding the right property can take time and effort, so be prepared for some legwork if you want to flip houses. You can expedite the difficulties of this process by enlisting a reliable buyers agent.
Also, keep in mind that your costs will increase the more rehab work you have to do on a property. So if you’re not finding deals at a good enough price in your local area, it might be a good idea to expand your search and travel a bit further to find better deals.
5. Is This Something You Can Do Long-Term?
Flipping houses can be a lot of fun, but it can also become overwhelming if you’re not careful. Don’t bite off more than you can chew, especially if this is your first time flipping houses. Instead, start small and gradually increase the size of your flips as you gain experience and confidence. Have a clear plan for how many houses you want to flip and for how long.
If you decide house flipping is the right business venture for you, be sure that it’s something you can enjoy doing year after year. Successful flippers often make money on more than one property at a time; some even buy whole apartment complexes or subdivisions of homes in bulk with their profits.
House flipping can be profitable if done correctly, but there are many things to consider before taking the plunge. By thinking about these five key points before deciding to flip houses, you can ensure that house flipping is the right move for your particular circumstances.
(Disclaimer: This content is a partnered post. This material is provided as news and general information. It should not be construed as an endorsement of any investment service. The opinions expressed are the personal views and experience of the author, and no recommendation is made.)
