With a myriad of DIY television shows focusing on home remodeling, it’s hard not to get excited about the prospects of buying a home and selling it for a profit. Whether it’s a home you plan to live in or one purely for investment profit, let’s dig into the topic of flipping.
What is house flipping?
Flipping is buying a property with the intent to hold, improve and sell for a profit. The profit comes from both the improvement and by determining that the home is in an appreciating market that will deliver a higher rate of return with the right amenities.
Is it still relevant in 2022?
Of course! There are always homes on the market that need both cosmetic changes and gut rehabs, depending on how extensive of a flip you’d like to take on. And with today’s low rates, buying has never cheaper.
Can anyone flip a house?
Technically yes, but you’ve got to decide if the risks involved and the funds needed are right for you. It helps if you are well versed in home acquisition, construction and real estate value. And if you don’t have those skills, your real estate team can help.
As a realtor with extensive experience with home construction and remodeling, I guide my clients in selecting properties that can net the best return both as is and with the cost effective improvements. I provide details on market trends in the area, feedback on what buyers prioritize in their search and a comprehensive list of contractor resources.
1. Inadequate funds
Not only will you need money to acquire the home, you will need a larger down payment for an investment property and that mortgage might come with slightly higher rates as it’s a higher risk for the bank. You will also need to set aside funds for the improvements and consider the money you will need to hold on to the property throughout the renovation and sale.
2. Short on time
Home flipping is playing the long game. You’ll need time to find just the right property, coordinate inspections, secure the right contractors, get permits for building, and complete the renovations and sell. Like with any renovation project, you might experience unforeseen delays from supply chain issues to contractor shortages.
3. Lack of skills
If you aren’t doing the work yourself, you will need to hire a team of professionals to do everything from demo to design to drywall. You’ll save a lot of money by doing it yourself but if you aren’t familiar with carpentry, plumbing and electrical, you’ll have to set aside funds for your squad.
4. Limited knowledge
How do you know if the home you find is the right one? Both for renovating and for resale? And if a bank will lend the money you need to accomplish both? This is where your realtor and lender team will come in to help guide you as you search. Lean on us for help from day 1!
Novices will want to jump on the first opportunity they see or get influenced by deals that seem to good to pass up. Professionals know how and when to wait for the best properties. Novices might also want to opt for the options that seem the quickest or cheapest while professionals weigh all the ways to minimize costs and maximize profit. It’s easy to want to jump in head first but you might find yourself up to your neck in debt and headaches. Novices often view flipping as a get rich quick scheme and professionals know that margins can be slim and that wealth is built over years of flips.
Calling in expert flippers
I had the pleasure of working with professional home flippers Emily and Lauren on their recent sale and got to see their process in action. They take great care in choosing the right properties and in allocating the smartest resources for a successful upgrade and sale. You can see samples of their recent property flips here and follow them on Facebook.
If you’d like to learn more about house flipping, I’d love to help. Reach out via email or call me to find out how you can start creating wealth through buying and selling homes.