If you are looking for another avenue to try to make money, you might be interested in flipping houses. This is the practice of buying a property and then selling it on for a profit. The key to making money when flipping properties is to buy one that is in need of repair or renovation. You are likely to get the house at a cheaper price because of the repairs needed. If you are good at DIY, then you can make the necessary repairs yourself and then sell the property for a profit. Sounds simple right? Well, it can be, provided you know what you are doing. But remember, buying and selling properties can be stressful, and there is a lot to think about such as agency and solicitors’ fees.
How to Get Started
The best way to get a cheap property is to search for foreclosures, but you can also do a property search with an agency or buy at auction. Those with experience in flipping houses will generally work with a real estate agent that can direct them to suitable properties as soon as these come on the market. This gives them the best chance of getting an early sale and beating the competition.
The 70% rule is one that many house flippers swear by. This means that they will only pay up to 70% of the market value of the home after they have taken care of repairs. The cost of the repairs should be subtracted from the 70% value. To make this clearer, think of a property that would sell for $250,000 in a good state of repair. Seventy percent of that is $175,000. But it would cost $20,000 to take care of any repairs. This means that the price you should pay for the home would be no more than $155,000.
Financing the purchase of the property will typically be with cash or with a bank loan. To get finance from a bank, you are going to need a good credit score as well as a down payment, which might be as much as 20%. Some lenders will accept your own home as collateral when applying for a mortgage for a house flip.
Taking Care of the Repair Work
Once you have bought the property, you will need to take care of any repair work. Any DIY skills you have will come in handy here and you may be able to take care of most of the work yourself. The experts at DevourTools.com say that having the right tools for the job is vital when it comes to house renovations and repairs. For example, if you are tiling a bathroom or kitchen, a tile saw with suitable tile blades will make the job quicker and much easier; if you are planning on doing any woodwork, you might benefit from a circular saw fitted with diamond metal blades.
If you don’t have the necessary skills for all the work required, outsourcing to a reliable professional is important. It is best to leave jobs such as plumbing and electrics to those with the skills and experience to take care of the work.
Making a Profit
The goal of house flipping is to make as much profit as you can in the quickest amount of time. Make a plan to take care of the renovations quickly and get the property listed for resale. The quicker you sell it, the more profit you are likely to make. A good real estate agent should be able to find a buyer for you quickly enough.