The term “house flipping” does not refer to the act of giants table flipping houses, but rather refers to the purchasing of properties like bank foreclosed houses, for the sole purpose of renovation and re-selling. There is a huge market for this in the US, and since the 2008 crash, a lot of houses and properties around the country were left either empty or on the verge of falling apart.
This type of financial investment can be quite risky, because there is no guarantee that there is going to be a return investment. This entirely depends on the value of the property, the cost of the renovation and the market value of the property itself, so keep in mind that you need some experience in that regard.
What the experienced house-flippers do
As we mentioned above, there are a lot of factors that make a house-flip successful job, with the same putting their weight against the success of the job. To help in this endeavor, here are some things you can do to tip the scales in your favor and to make the flip as successful as possible.
Get the right tools for the job
A renovation is not a necessary part of house flipping, you can always re-sell the property for a slightly higher price, however, the higher potential value of the transaction comes if you add value to the property. One of the ways with which this can be done is through a renovation process which requires tools.
Getting the right tools for the job means that the work with be smoother, easier and will take less time. If house flipping is something you’d like to peruse, getting a fleet of tools, from electric, to battery powered ones, compressors with all of the bells and whistles, you probably have the majority of them.
Of course, you don’t HAVE to have them, you can also rent them, however, the cost of a deposit might be equal the market value of the tools themselves. Getting them over time and accumulating a full fleet of them will provide you with a lot more comfort, without having to scramble for tools.
Get help and a contractor
While contracts cost money, they also save time and can even provide some reassurance for quality. Depending on the area where you are doing your business, you can get highly skilled work at a reduced price, compared to the overall prices in the US.
A contractor will help you liquidize your investment so you can move on to the next one and make a higher profit. You can also work side by side, if you already have experience in construction or an avid DIY supporter – this will reduce the cost of labor, while providing you up-close look at the process.
Check the property before buying
A vital part of flipping a house with a renovation, is adding value to it, however, if the property is severely damaged and has experienced water damage, or has foundation issues, you might pay a hefty price for the renovation, reducing your margin. To avoid turning your investment into a black hole, we recommend you use professional help when assessing a property and never buying it of a listing.
It’s always a good idea to first inspect the property and then decide if you can work with it or if its way too much work for the end value which you are looking to get out of it.
Study the history of the property and the neighborhood
Aside from the property itself, there are other things which determine how much you can sell the house for. The history of the house, its accessibility from other locations like the city and important locations are also important deciding factors which will make a property easy or hard to sell.