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With the popularity of home renovation shows on television, interest in house flipping has exploded in the last ten years or so. Prior to the reality TV takeover, there were only a few people in the market for a fixer-upper house for sale who had the goal of renovating it and reselling at a profit. Today there are dozens. If you think house flipping is something you might want to get into, we've created this article on the subject so you can get an overview of what's involved. Here are the four things you should have if you want to successfully flip a house.
Money
The previous owner will not sell you real estate for only the promise of later payback, so you will need to secure a mortgage from a private lender and be prepared to make the payments on it until the renovations are done and you've resold the house. Keep in mind that you'll also need a significant amount of capital to lay out for supplies, materials, and tradespeople to complete the renovations. Budgeting is key, but be forewarned that it's quite possible you may exceed your estimates even despite your best intentions.
Time
House flipping is not something you want to try if you're working full time and you don't have any partners. The renovations will take time, and if you're away eight hours a day they'll take even longer. Since you're making monthly mortgage payments on the home, the longer you take the more money you spend and the smaller your profit margin becomes. Many people find it helps to live in the house they're flipping to save time and money.
Skills
Depending on the amount of work that needs to be done on the property you bought, you'll need to be familiar with plumbing, carpentry, laying flooring, installing appliances, and electrical work. Repairs that seem simple at first glance are often more complex, so even if you are an experienced handyman, you should keep some reference books and numbers for contractors you can trust nearby in case things get out of hand.
Salesmanship
Savvy flippers know which types of houses in which neighborhoods are likely to sell well, and choose their projects accordingly. They also know that in a buyer's market, their home will be competing with other homes for sale, reducing their chances of profit. Once the repairs are complete, you'll also need to sell the home. That means paying for ad space, hosting open houses, showing the home, and negotiating with buyers. If you're not a natural salesman, it may be worth the commission to get a realtor on board to help.
If there is any chance you can get a home inspection done of the property before you buy it, absolutely do it! There may be thousands of dollars worth or repairs you cannot see below the surface. Repairs that you don't plan for and can blow your budget out of the water.
Put your home inspection in hands you can trust with Housemaster West Chester. Call their office at 610-269-1184 or visit them at 929 South High Street #169
West Chester, PA 19382.
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