The real estate industry is one of the most lucrative businesses in today’s world. Property flipping is just a tip of the big iceberg, whereby investors have been buying homes, prepping them up, and then selling them at a good profit. If you are considering flipping your home, then you must understand that the process is not as simple and straightforward as you may think. Television content has deceived many people by presenting well-dressed and good-looking investors, depicting that the process is fast, fun, and profitable.
It might be true, but if you are unprepared, then home flipping is not a thing for you. In this article, you will learn all you need to know about how to flip a home successfully. The journey to successful home flipping is not all about curb appeal and putting up a ‘sold’ sign – many would-be real estate professionals do not understand the stages involved in the process. This is one mistake they make, and they end up failing terribly. Read through to understand the whole concept of flipping a home and get more tips on how to flip a home successfully.
Pros and Cons of Home Flipping
It has become almost a norm that if you want to get some good money, you should consider flipping a home. The process involves using your home or buying it from someone else, making some major improvements, and putting it back on the market. However, have you ever considered the benefits and risks associated with home flipping?
Pros:
Understand the Construction Process: The aspects of the construction process become clearer as you indulge in repairs, renovations, and remodeling of the property in question. You gain more knowledge on a few electrical and plumbing repairs and learn more about the price of the required materials. Additionally, you get to learn more about how to identify big issues, such as structural and environmental hazards. Home flipping is a process that can help you make more money in the future because you will also understand how to negotiate better with prospective buyers.
Build a Stronger Network: When you think of how to flip a home successfully, you must also know all the people who will be involved in the process. Investors, realtors, and building inspectors are some of the professionals you are likely to mingle with during the flipping transaction. This is the best chance for you to create strong relationships with such people in case you need them in the near future. Such networks are so helpful later when you need to flip another property.
Fast Profit: Making quick money is one of the main reasons why different people are willing to get into the flipping business. When done in the right manner, a home flip can give you profits that even exceed the average salary in your location. Moreover, it takes just a short time to realize these profits. In many cases, you get the returns within a few months.
Better Understanding of the Market: When you flip your home, you become conscious of what prospective clients want. This is a great tip on how to flip a home successfully. You might have decided to sell your old house and call in a lease moving truck to help you move to your new location. The experience is enough to give you all the details about what future home buyers would want. Therefore, you might find yourself making it your usual job to buy, renovate, and sell property in the real estate market. The first step to becoming successful in any business is identifying the niche and trying to deliver what your clients want.
A Better Understanding of the Local Market: Times have changed drastically, and so has the real estate market. The first thing to consider before putting your property on the market is detailed research. Think of discussing the matter with experienced realtors, considering how the most recent property was sold, and dig deeper into the ‘sale ads.’ This will enable you to understand the market better. For instance, some clients in your area may prefer the modern designs, while others will go for the traditional models. It is your responsibility to determine which one attracts more potential buyers and brings you the most profit.
Self-Satisfaction: Once you flip a home, you will realize that you are not only after the profits – it will make you feel better knowing that you created a better place for the buyer. The other reward that might be associated with home flipping is that you make life better for the streets and the neighborhood where the property is located. For instance, once you make improvements on a property, you give it a higher value, consequently raising your neighborhood’s standards. That is something you can be proud of in the future. It is also satisfying to realize that you identified some potential in your home that others could not. For instance, the roof was worn out, and you took it upon yourself to procure new roof installation services.
Cons
Loss of Money: It is no news when you hear that someone has lost a substantial amount of money while trying to flip their home. Although you can get a good profit quickly in the flipping process, it is also vital to understand that you can lose good money as fast. This is most common, especially if you have not had your home maintained for a while. For instance, if you have not procured mold removal service for some time, you will realize that it will cost you more to get rid of the mold build-up.
Everything going Haywire: There is no doubt that property flipping is a time-consuming and stressful process. It takes time to get the best client, and in most instances, nothing goes as planned. Missing deadlines and getting the wrong deliveries are some of the challenges you can come across in the process. However, if you have flipped some property before, then you might be at a better chance to handle such challenges.
Extra Expense: Holding cost is one of the basic expenses that could be causing trouble when it comes to how to flip a home successfully. When flipping your property, the first thing that runs through your mind is getting a buyer as fast as possible. However, in most scenarios, clients delay showing up. As you wait, you will be forced to incur some expenses, such as paying for mortgage, insurance, and property-related taxes. You will also cater for maintenance costs, such as when hiring landscaping contractors. The garage door repair services may cost more than you anticipated. Finally, if your home stays on the market for long, you might have to lower the asking price, which will most likely affect your profits negatively.
5 Things to Consider Before Flipping your Home
Now that you have read the pros and cons of home flipping and have made a decision to dive into this business, you must also know all the factors to consider before signing off the property. Home flipping involves more than just making a few amendments and putting the property up for sale. There are several factors you must put into consideration. Five of these factors are discussed below;
Do Not Work Alone
There is too much work put into rehabilitating a home for sale. Some projects are do-it-yourself, but others require professional intervention. It is invaluable to have a team of professionals who can work perfectly on projects that may confuse your mind. Take, for instance, your property has a faulty plumbing system, and you have little to no idea how to deal with that. Procuring a residential plumbing repair service is the best option you have. If your compound is filled with animals that you might not want the new owner to see, it is advisable to get animal removal services from the appropriate companies.
The other people you might consider adding to your group include a lawyer, insurance and real estate agents, a home inspector, and an accountant. These professionals will make your flipping work so easy. Real estate agents will help you locate, negotiate, and close the deal with the best customers in the market.
Prepare for the Costs
Sticking to the 70% rule is inevitable if you want to realize some good profit from your flipping transaction. This involves understanding the maximum amount you can spend on the repairs and renovations, which will help you get a reasonable profit from the sale. There are several costs and expenses that you can incur when it comes to how to flip a home successfully. However, the 70% rule is there to ensure that you get a profit or at the very least don’t lose any money, regardless of the time you hold the property.
Moreover, sometimes things do not go as planned, even for the most experienced home flippers. Some expenses may come along as you undertake the renovations. For example, the economy has been at its lowest during this covid-19 pandemic, which implies that you can start renovating your home and be faced with a market cool-off before getting a potential buyer. Estimating the costs is a good way, but you have to be prepared for the worst.
Understand the Market
The real estate market is a wide one, but it is your responsibility to understand all its twists and turns and what potential buyers are looking for. If the property is not well secured, you can consider hiring professionals who offer fencing services. Once you understand the market and what buyers want, then you can be sure that you know how to flip a home successfully. Moreover, understanding the market helps you know the property’s value in question and estimate how much profit you expect from the sale.
The neighborhood may determine how fast the property will sell. When it comes to the home’s paint, you must understand what potential clients are looking for. Once you do, it is time to consider hiring residential painting contractors to decorate the property professionally.
Have Realistic Pricing
Undoubtedly, you want to get as much profit as possible when you flip your home. However, one of the most common rookies that home sellers commit is over-pricing their property. That is not among the tips on how to flip a home successfully. Consequently, overpricing can see your home staying on the market for a long time. Successfully flipping your home means that it gets out of the market as soon as possible so that you can pocket the money from the sale. Talking to a real estate agent can help you determine how much you can expect from the remodeled home and price it accordingly.
Keep the Buyer on the Know
Potential buyers want to understand what kinds of renovations were done on the property in question. The best way to explain that is by making a list of all the systems that have been renovated and how each one functions. If you have an HVAC system repaired, then keep them alert. Take a snapshot of the new roof. Give them information on how they can access a cockroach exterminator. These are just but a few things that can make the new buyer’s life easier on the property and gain you their trust for future references.
You have finally decided to move to a new location or residence, but you do not know what to do with your old home. Flipping the property is among the best options you have if you want to make the most out of it. Learning how to flip a home successfully is not a walk in the park. You will need all the details you can get to make the process as successful as it can get. There are so many benefits of flipping your home, but this article has listed just a few of them.
Additionally, you must also learn about all the disadvantages associated with flipping your home, including the potential for monetary loss and all the expenses involved. There are also some things you need to know before getting into the home-flipping business, such as embracing teamwork, not overpricing the property, and understanding the market. In that case, you will have learned how to flip a home successfully.