House flipping may look easy and perhaps even glamorous based on the many popular shows on TV. But it takes smart thinking, skill, hard work, and solid financing to be successful.
House flipping refers to buying houses that are considered “distressed,” fixing them up, and reselling them for a desirable profit. Such properties can be found on the open market, in property auctions, in bank short sales, or in foreclosures.
Some Things to Know About House Flipping
House flipping is attractive to “flippers” because of the potential to make a good profit. But there is also the potential to lose one’s investment. This type of investing is less risky than other types of real estate investing but it does require a lot of careful planning and budgeting. Success requires getting a team to work with you including a real estate expert and a good general contractor.
A Beginners Guide to House Flipping
Use these steps to guide you in the process:
Research the market so you can find the right location(s) to invest in. Class A neighborhoods have the highest real estate prices. Class B and C neighborhoods are the so-called middle-class and working neighborhoods. Class D neighborhoods represent the poorest areas. Class B and C neighborhoods are the areas to focus on.
Get the right people to help you. Choose your real estate and construction professionals wisely.
Decide on the house to buy and use the 70 percent rule to plan your budget. That is, only pay 70 percent of the after-repair value of the house.
Plan remodeling efforts that add real value to the house.
Get your financing all lined up. Budget for the rehab costs, the down payment, insurance, and closing costs.
Get the renovation work done.
Price the house properly based on its new market value.
Seek Expert Financing Assistance
Contact Ideal Financial Group for the financing that you need. We have a full spectrum of financial products designed to help provide the capital necessary to prosper and grow.