Flipping houses is a term lately popularised by some much loved and admired TV shows that have romanticised the whole concept. From purchasing distressed properties to Flipping Houses In California with lucrative profits, these shows have successfully promoted the real estate career of flipping houses. This post is directed to provide you with a step-by-step beginner’s guide to begin your investment journey in the real estate industry through flipping houses.
Flipping Houses! What does it mean?
This is a home renovation and selling project, where you buy an old and ill-maintained house and bring it back to life by upgrading it to the latest style and design for selling and earning profit. The distressed houses are usually the ones that are under foreclosure or auction and have faced some serious maintenance issues with a financial crisis. In some cases, during flipping a house you need to either work with a pathetic layout and have to make some significant changes and structural renovations to bring the house to a condition that could bring good profit. However, in some other cases, you need to take care of some normal wear and tear and make some aesthetic renovations before listing it for sale.
Whatever the kind of renovation and actions a house needs to undergo, it is important to get some customers as early as possible for the success of the project.
Stepwise guidance to house flipping:
If house flipping is in your mind then you need to plan out everything beforehand for a successful and smooth process. The best way to enter the industry and invest your time, energy, and money in house flipping is by doing thorough research on the industry, talking to market experts, and skilling up your negotiation skills. Here is an overview of the steps involved in the process of house flipping that can guide you better.
- Setting a Budget: Fixing a budget and working by keeping it in mind is the key to acquiring a successful deal. Staying within the allotted budget is very necessary to earn profit from the investment in a distressed house. It is recommended that when you prepare a budget for your investment in flipping houses, you should aim for at least a profit of 10 to 20% from it. A well-planned budget can help in acquiring funds for the budget and help in making everything go as per plan.
- Consider the ARV model: ARV model standsfor“After repair value”, which means the estimated value of the property after it is renovated. In the real estate investment business, it is essential to have an idea of the AVR model for proper profits. It is expected that you will keep this value in mind while setting the budget and posing a final price of selling after the completion of the renovation. Experts have crafted a 70% rule within the ARV model, which states that an investor should pay 70% of the ARV minus the repairing charges while investing in a distressed property.
- Finding a distressed property: There are some online and offline spaces where you can get notified of the available distressed properties that are in dire need of an investor and renovation. Look for the auction listings of banks, Probate Property List, Tax record offices, etc and find the perfect property that fits your budget and has the potential to bring along good profit numbers. However, if there is one tip to get your flipped property sold out early and in a large profit margin then it is better to look for houses in good neighbourhoods.
- Connect with contractors and vendors: The very next thing after purchasing a distressed property is to get it renovated as soon as possible. And for the work to begin as per plan and within a fixed budget, you need to be well-connected to contractors and construction vendors who will be part of the project and help in achieving the desired output from the purchased property.
- Design the house: When designing or remodelling a house try to upgrade it with the latest styles and designs by keeping in mind the targeted customer. Your design must attract potential customers and make them pay the amount you are asking for, else there is no point in making the efforts and investment. As when Flipping Houses In California, you should be aware of the contemporary styles and trends and try incorporating the same during the renovation.
- Listing for sale: When all is done, it is time for listing the property for sale and making it available for the customers. You can start by listing it on various online real estate sites for customers to get notified about the same and show interest in purchasing the same. Put forward your selling price calculatingly so that you can earn at least a 10 to 20% profit out of it.
The Final Word
If you are seriously considering a real estate career and flipping houses, then this guide post can definitely help you to make profits. Set your budget, look for properties in the Probate Property List or auction lists for low-price investments and get to work for earning profits.