After a long day of work, you sit back relax and turn on the TV and there are people buying fixer upper houses and reselling them at huge profits! What’s even more amazing is they claim they are doing it with no money down and you can too if you’ll take their course or buy their books! It seems easy enough, just find the house, put in a little work and turn around and sell it quickly for a gain of what it takes you to make in an entire year working! And even better if you can do this a few times a year you’ll really be raking it in!
Flipping is rarely that easy, but there is money to be made. If it were easy, everyone would be doing it. Flipping became even more popular with TV shows such as “Flip this House” during the big real estate boom, however for people who didn’t plan accordingly or made mistakes the flips and the profits turned to losses.
To flip a house, there you’ll need to do your research. There’s a lot of competition out there so you’ll need to be able to act quickly on the “deals” or else someone else will snatch them up. Acting quickly does not mean acting recklessly or getting emotional in the process. Before buying a flip it is best to know the market conditions and trends.
The most important thing in a flip is cash or the ability to borrow. You’ll need to put up some money when you purchase the property, then there is the cost needed for repairs and fixtures. There are also other costs like property taxes, utilities, insurance and interest that add up day after day. You need the ability to manage these costs and need a cushion in case things do not go as planned.
Finding the right property is the next crucial step, getting one below comparable prices is where the most profit is made, however there is usually a reason a house is below the neighborhood average, and that being the carpet is shredded or the plumbing doesn’t work or the house needs major work. If you can successfully buy a house well below the average and put in repairs and changes that will cost less than your final sale price that’s where the profit is.
Deciding what to fix is the next step. Some homes merely require small cosmetic updates, like a fresh coat of paint and some new color. Others may require a total redo of the kitchen and baths, and some even structural changes to add larger rooms or an extra bedroom. You will need to calculate the scenario that achieves the most profit for what you have.
Once you have the house fixed up and ready to resell, you’ll need to market the property to get it sold. You realize no profit until the property is resold! You should properly stage the home to help in the selling process. Lastly is negotiation, the same tactics you used to get a deal on the property, the new buyer will try to use so they can negotiate the best deal. Your goal is to use those to get as close to asking price as possible.
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