Locating The Property
Before you venture into the market, it’s important to understand the various factors that come into play when buying a property with the intention to resell — these include (but are not limited to) its location, structure, materials, and, of course, price. If you’re planning to house flip in the long-term, you should put as much time into finding a good realtor as you do in the ideal property. The right individual can help you to navigate the above factors and advise on finding somewhere with high appreciation potential.
It might also be worth forming a business of your own before making any key purchases. By adopting a protective business structure, such as incorporating your business, you can benefit from tax advantages and asset protection.
After establishing your business, you’ll want to invest in some fundamental tools like payroll software to ensure that payroll services are processed quickly for your new employees. Dedicated software can track time, withhold taxes, and create direct deposits quickly and efficiently, making for fewer headaches and more time saved for you.
Types of Mortgage
Traditional mortgage loans are rarely the right option when house flipping — if you want to get the best deal on a loan, it might be worth looking into private lenders. The reasons for this are as follows:
⦁ Traditional lenders require a longer, more extensive process involving large amounts of documentation
⦁ Mortgage lenders often require ⦁ W-2 forms and pay stubs as proof of income. This can make applications complicated for full-time real estate investors
⦁ The market value of your desired property may not be worth much but you still need enough money to purchase this property and pay for improvements. Conventional lenders like to keep their loan-to-value ratio below 80%
Instead, it often makes more sense to look into private lenders for hard money loans. These lenders are experienced in lending for flipping and will typically require less time and paperwork and are more concerned with the property itself and your ability to successfully sell.
Renovating
Once you’ve bought a property, the priority becomes making improvements that will increase its value and sellability. Common renovations include installing a new range hood in the kitchen to add some fresh air, adding a fresh coat of paint, and updating any sinks or appliances that have seen better days. Typically, house buyers are most focused on the kitchen and master bathroom, so it would be beneficial to invest a portion of your money to remodelling those areas.
Remember, there is no one-size-fits-all approach to renovating but it’s important to plan well ahead before spending any cash. Take some time to build inspiration boards and use your research into the local area, buying trends, fashions, demographics, and more to inform your decision-making. Everything from the shape of the door handles to the color of the walls should link back to your intention to sell.
Selling Properties
If you’ve carried out all the steps up to this point correctly, actually selling the property is the easy part. Start by using a free banner creator to generate an eye-catching ad, then share it via social media, as well as your own website. You might also want to advertise your flipped house using directories like Zillow and Trulia or consulting with a realtor to coordinate campaigns. Sometimes, basic direct mail/email campaigns are effective but there is also a lot to be said for simply placing a sign out in the front yard.
The above tips can help you to get started when it comes to house flipping but there’s quite a bit more to learn. If you want to venture down this complicated but potentially lucrative path, you’ll need to do plenty of research and seek the help of more knowledgeable professionals.
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