For savvy investors, real estate is a surefire way to make a solid return on your investment. With investment opportunities ranging from monolithic purchases like apartment buildings and shopping malls to those no bigger than a small home, it’s safe to say that real estate is a great way to invest your hard earned money.
Of course, most investors don’t start their career off with big purchases. Most start small, building their real estate empire one brick at a time. If you want to start on your real estate empire before too long, you’re going to need a real estate investment that will provide you with a safe and predictable return on investment.
There are quite a few options that meet these requirements, but perhaps the best and most predictable investment is a house flip. This process is quite simple, all things considered; all you have to do is buy a home, fix it up, and sell it for a profit. Since you’re the one adding value to the home, you don’t rely exclusively on property value appreciation. This makes it a lot safer than other investments for first timers!
While it may sound simple, flipping a home isn’t quite as straightforward as it might seem. There’s a lot of hard work involved when it comes to preparing a run-down house for resale, and the formalities and technicalities of a real estate transaction are no walk in the park either. If you want to take a shot at flipping a home, you’re going to need some solid advice. Luckily for you, we’ve got that in spades!
Buying a house to flip
The first step towards flipping a home is buying one. Which one you choose will have a substantial impact on how much you’re able to sell it for, in addition to the satisfaction of the buyers. If you’re going to make a profit on your investment, you’re going to need to think on your feet and learn to spot the difference between a home that will work and one that won’t.
There are a lot of things to look for in a prospective flip house. The first thing you’re going to want to check is the structural and cosmetic state of the home. Many things can be fixed with a bit of time and effort, but some damage is so expensive to repair that it will make the entire endeavor a net loss. Learn to distinguish between these different types of damage!
Another important factor is location. As you might imagine, the neighborhood in which the house you plan to flip resides is very important. Property values are not determined solely by the home being sold, they’re also determined by the homes around them. If you plan on selling the home for a substantial markup, be sure that the neighboring property values are similarly high.
Finally, do your best to suss out any hidden downsides or flaws in the home or surrounding area. When you find one or two, they can either be a dealbreaker or a powerful bargaining tool, so use them wisely. If you play your cards right, you might even be able to leverage them with the seller and get a discount!
Fixing it up
It’s no secret that home flipping involves a lot of work. The houses that are best suited to be flipped are most often damaged near the point of no return, requiring fantastic amounts of effort to make them livable and attractive once again. If you’re going to flip the home you’ve bought, you’re going to need to get it in ship-shape once again.
Before you begin fixing up the home, you should consult a building inspector and a contractor to discuss just how much functional damage the home has sustained, and how expensive it should be to repair. A contractor will also help you figure out what you can do yourself, and what requires the skill and professional equipment of an experienced crew.
As for the work that you can do yourself, it’s simply a matter of rolling up your sleeves and getting down to it. Most of the work required to fix up a home in a state of disrepair is not particularly difficult or complicated, it’s just time consuming. It can be tedious too at times, but it doesn’t have to be; put some music on and the work will simply fly by!
Although you might not expect things to pan out like this, working with the contractors is often the hardest part of renovating a flip house. With years of experience, contractors know what works and doesn’t. Unfortunately, this often makes it difficult to agree with a client regarding the best way to do a job. If you’re having difficulties with a contractor, try seeing things from their perspective. Are you sure you know the best way to do this? If you don’t, trust the professionals!
Redecorating the space
Once the home is in good condition structurally and functionally, it’s time to start working on the aesthetics of the place. This includes everything from furniture to flooring, and can be as detailed or as minimal as you want it to be. Remember, the end goal here isn’t to create a home that appeals to you; it’s all about figuring out what’s most popular among the house-purchasing masses!
If you choose to undertake this process yourself, you’ve got a lot of work ahead of you. Fixing up the structure and shell of a home may be hard, but interior design is an entirely different type of difficulty! You’ll have to spend long hours choosing color schemes, picking out which type of flooring goes best with that color scheme, and then trying to find furniture to go with the flooring. It’s a tedious process by any standard!
There is an easier way to go about the process, of course; hiring an interior designer! By hiring someone who has trained professionally to do this exact job, you’ll be able to take all the guesswork and legwork out of the ordeal, without losing administrative control. At the end of the day, the interior designer works for you, and what you say goes!
Regardless of how you ultimately decide to decorate the home, you should always keep in mind the fact that this home is going to be sold at the end of the process. Don’t get attached to the place, and don’t let your fondness for your project cloud your judgement. This is an investment, and you’ve got to make sure to maximize returns!
Putting it up for sale
At this point, you’ve likely put hundreds of hours into this home. You’ve sweated, bled and likely cussed once or twice, all to put together what is hopefully the most beautiful home on the block. Now that physical work is done, you can finally see the light at the end of the tunnel, shining with a money-tinted hue. But don’t get too excited just yet; there’s still one more step left!
Before you can reap the sweet reward for your hard work, you’re going to have to find a real estate agent who can sell your newly refurbished property. This isn’t the hard part though; that comes next! Once you’ve hired a reputable real estate agent, you’ll have to start the process of marketing, showing and eventually selling this property.
Of course, the real estate agent will do most of the heavy lifting here. You won’t have to run all over town drumming up leads or do the boring boilerplate paperwork required to close the deal. Yes, most of this will be taken care of by your real estate agent, but there’s still work to be done by you!
Don’t worry though; your real estate agent will walk you through whatever tasks they assign to you, and they’ll help you if you ever fail to understand something or simply don’t know what to do. Ultimately, a big part of a real estate agent’s job is making sure that you get what you want from this sale. That should take a lot of the weight off of your shoulders!
Well, there you have it; the beginner’s guide to flipping your first home. It’s far from comprehensive, obviously, but it should give you the basic information you need to know what the process looks like and what you need to do to invest like this. We hope it helps you, and we’re here to help with any questions you might have. We wish you the best of luck!
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