When it comes to investing in the real estate market, flipping homes is the best way to create wealth. Do remember that almost 90% of the world’s millionaires made their wealth through some type of real estate investing. A lot of regular folks wonder how a regular person can flip homes to make a big amount of money in the current real estate market. Let us go through the basics of how to flip houses by going through the key topics.
What is Flipping Houses
If you want to maximize your profits with real estate investing, then flipping houses is a good strategy to pursue. Flipping properties is a term that is usually only used in Real Estate – when an investor takes over a property and quickly resells it for a profit. Some flippers also do renovation but this can turn out to be risky and should not be attempted by the novice investor. Any default property that is being auctioned by a bank or has been neglected can be bought for a lower-than-market price. Flipping properties is also done by Real estate Agents and dealers but then just like any other business, it is entirely possible for anyone to enter the business and do well.
After you have found a suitable property, you will typically go ahead and purchase the property. But there are also other ways to control the property without spending crores. In this type of arrangement, the flipper ends up controlling the property but without the normal burden of having to worry about EMI’s. Once a flipper is in control of a property then it is the job of the flipper to market it to prospective buyers. The marketing process can consist of anything from local marketing through newspapers and Internet ads to developing a relationship with Real Estate Consultants like us! You final goal is to get the property seen by as many potential people as possible and that too in the shortest possible time. Time is money and the more prospects that are exposed to the property, the sooner your chances of selling it.
Once a property has been sold, the flipper should then immediately start looking for their next property without wasting any time. Astute and experience flippers commonly control five to eight properties at any given time. Flipping houses is a great way to earn money in the world of real estate. You purchase a property, fix it (or don’t) and then sell it for a profit. These are the 3 aspects whereby an investor can earn a substantial profit. An investor who can buy, fix and sell an apartment or a bungalow in a good location is soon flush with money and profits that can be employed to fund their next real estate investment.
Buying a Property
This is obviously the first aspect that you need to get started in when you start flipping houses. Firstly you must consider the amount of funds that you can allocate to buying a property. Do you have the cash to buy the property? Will you be applying for a loan? Do you have a co-investor or a partner with whom you can share the costs of the purchase? Depending on your financial situation and funding sources, these are important considerations before buying a house that you want to flip. Before buying a house, the usual considerations have to be taken in place such as the location and the quality of construction of the property. Always choose a house in a good neighborhood so that the property can be sold off easily. Also find out what are the other improvements that will be necessary to make the house more appealing for a sale. Check for leaks as well as damaged flooring, plumbing and roofing. Always assess the house that you are considering to buy with a fine tooth comb and check to see whether the condition of the house is worth the effort and money that you will expend in order to restore it. Experienced flippers always choose properties where only minor repairs are necessary – installing new cabinets, repainting and gardening.
Your goal as a real estate flipper is to make money. So it is best to buy a property that is priced below the market value. Your job as a flipper is to find motivated sellers – sellers who are keen and desperate to sell out as fast as possible. These desperate sellers may need fast cash for any number of reasons such as debt, loss of income, failure of their business, divorce, death etc. These sellers will be ready to sell their homes quickly at lower-than-market prices.
You can also look at distressed properties. Look for announcement of seized assets of loan defaulters by banks in the newspapers and find out if you have the resources to bid for these properties. Do be very careful though because some of these seized properties are sealed off and the banks / lenders will not be able to give you a preview of the house.
When you buy a house for the purposes of flipping there are several factors to be considered including the location, price and the structural value. You can start by buying the most widely-purchased property by Indians which is a 1 BHK or a 2 BHK in a nice neighbourhood. The apartment must be located in a nice liveable area of the city which is populated by a family crowd and is in close proximity to provision stores, supermarkets, schools and railway or Metro stations.
Fixing the House
Renovating and improving the house is the next step that you should be doing when flipping houses. Create a budget for the materials, labour and other expenses that you will be required to make. Think about whether you would like to hire a contractor for the job or whether you would like to do the fixing yourself. Find the cheapest labour for the job. Apart from the budget, you also need a timeline to finish the renovation job. Remember time is of essence when flipping properties because a house that remains too long in the market is no longer profitable. In the best case scenario, a house must be sold within 90 days from the date of purchase.
When fixing a house, always focus on the main aspects that can increase the value of the property. Fixing and replacing the electrical wiring and plumbing is a must. Remember to keep the design of the house simple, neat and attractive without any ostentatiousness. Leave room for the buyer’s imagination and for adding his own furniture and accessories.
Selling the House
As an investor in real estate, everything boils down to selling the house for a profit. Keep an open house all weekend long and invite prospects to come and inspect the house. Use property portals to market your property. Take good pictures and videos and upload them on various portals including YouTube. Contact the top real estate agencies and give them good commissions and incentives to sell your property.
Remember flipping houses can be just what you need to earn more money. Invest in house flipping projects and you can become a millionaire many times over and generate huge profits in a short span of time!