Regardless of the state of the market, one thing is always true: people need homes to live in. What’s more, there’s never a shortage of homes that need attention to recoup their true value before they’re sold. As such, for those willing to do the hard work, house flipping is a lucrative and exciting business.
Unsurprisingly, just like any business, many nuances go into pulling off house flipping successfully. What to know before stating house flipping includes budgeting responsibly, financing repairs, and thoroughly understanding your local markets.
Set a Budget and Stick To It
Just like many businesses, successfully flipping homes requires close attention to finances. It’s no use to buy and sell homes—regardless of how beautiful or affordable they seem—if there’s little to no margin of profit after each sale. Each home has to fit within a strict budget based on your limited finances. What’s more, homes have to have a chance to sell higher than your initial investment.
Other times, some homes may be extremely tempting. Inexpensive price tags often disguise a slew of repair costs. Unless you’re willing to do all the work yourself, make sure to buy within your means, including potential repairs.
Decide Whether To Renovate
What to know before starting house flipping should also include a healthy awareness of the potential work ahead. Affordable homes that sell under their projected value are likely priced as such due to problems. While it’s not a good investment to purchase homes in severe disrepair, almost every house will need at least a few fix-ups.
Whether or not it's affordable to hire contractors depends heavily on the potential profit margin and state of each home. For many, you can likely expect to work on them yourself, including disposing of any debris. Luckily, these days there are many affordable and eco-friendly junk removal methods to dispose of garbage, abandoned appliances, and construction waste.
Explore Your Local Housing Market
The success of any house flipping venture starts with identifying potential prospects. Depending on where you are in the country, these prospects will vary wildly in price point, features, and condition. Even within a wide local radiance, neighborhoods and property types often vary dramatically. As such, it’s crucial to understand your local markets. Explore homes for sale in your areas and keep an eye out for changes in listings over a few months.
Chances are you’ll be able to spot homes handled by other local flippers, which will give you an idea of your competition. Figure out what people near you are looking for and the average value of homes by type and area. Once you understand these elements, it will be much easier to spot and plan for strong investments that will turn a good profit.
