Basically, there are two ways an investor in the real estate industry can make money, either by buying a house below the market price, renovating o upgrading and selling it, or by buying and profiting from the rental income. House flipping is basically the purchase, mostly of foreclosed or bank owned properties, renovating and selling them for a profit. As easy as it looks, house flipping is actually pretty complex. Here is a look at some of the routines that the successful house flipper follow.
When looking to flip a house, look for residential properties that otherwise would not appeal to the conventional buyer. The successful flippers know how to look beyond what seems like a moldy basement or an old kitchen, and see the potential of the house. A clever way to find such properties is to cultivate a good relationship with real estate officers and attend auctions.
Any flipping exercise requires the ability to compare the current value of the house to the value after repair. One can only earn a profit if the value after repair is higher than the value when the house was bout. It is important to understand the market, and know the difference, for instance, between the mortgage rates and conditions for single family and multi-family homes. This will help in choosing properties that are likely to be more profitable. Also, it is important to compare apples to apples. Make comparisons with similar properties sold in the same area, since different neighborhoods normally have different rates.
Successful flippers know where their strengths lie, and are not afraid to use them. However, they also know their weaknesses, and are not afraid to bring in other experts to help out. Bringing in experts is especially helpful when doing appraisal. Always make sure the experts have enough experience, especially when dealing with local properties since they will very easily identify the potential problem areas. Again, a good relationship with local real estate agents can be helpful in finding experts who will then make it easier to find an accurate after renovation value.
After finding that gem of a house, the next stage is to renovate and decorate it, after the appraisal and determination of what needs fixing. The temptation is always high to decorate a house to one’s preferences. However, it is important to remember that the potential buyer likely will not have the same tastes. As attractive as certain elements might seem when added to the house, it might be useful to go with simple, classic designs. These will not only appeal a wider audience, but will leave space for addition of features to the preference of the new buyer. However, it might be helpful to do some research on what the average homeowner in the region could require and make those specific additions. These might make the house more appealing.
Isabella Rosselini is a reputable real estate expert and investor. She has been involved in various real estate deals and Matunga residential projects. She also mentors hundreds of beginner investors in the field every year.