House flipping is when a real estate investor purchases a home, and resells it for a profit in the near future. In order to make a legitimate and worthy amount of money flipping a home, there are many things to pay close attention to in order to be successful. J&B House Solutions can help you with the process.
Before you begin, you want to make sure your credit score is in excellent standing. This is especially important if you want a loan for a house flip that is considered high risk. You should also have cash handy to use for a down payment. Having cash makes it so you don’t have to pay private mortgage insurance. If you have enough cash in savings, you could purchase a bargain-priced home and take out a small loan or line of credit to pay for renovation, realtor fees and other costs.
Knowledge of the real estate market is also very important. When you are in the mindset of flipping a home, you want to find one in a good location so you can fix it up and sell it for profit as quickly as you can. The longer it takes to sell the home, the more money you lose out on. The better the market, the quicker you can sell the home.
There are several elements that make a good real estate investment that you should look for when wanting to flip a home.
Location is one of the most important factors. Find a home in a neighborhood, with a good school district, that is desirable by researching local cities and rising real estate sales. Sound condition is also important, as you don’t want to have to tear the house down and rebuild from scratch. Look for a home that is structurally sound. There is a chance you may not have the money for inspections, so do some research or find some connections with someone that has knowledge of things like building, electric and plumbing so they can look at the home.
It’s likely you’ll be working on this home whenever you have the free time from work or other life chores for weeks and months to come, so you want to invest in a home that isn’t too far away from where you live. The longer it takes to drive to the home, the more gas you are spending, and the longer it will take to fix it up and flip it.
You want the home to be below its value in the local market, or else you won’t make much profit. Look for the worst house in the best neighborhood, versus the best house in a bad neighborhood. This way the house will have nowhere to go but up when it comes to value.