There are many ways to make money with real estate, and one option is to flip homes. Flipping a house involves buying it for a low price, fixing it up, and selling it for a profit. This is a great industry for people who are good with home design and repairs, and it could offer a way to make a good living. If you are interested in this idea, here are some tips that may help you get started.
Locate A Real Estate Investor
If you cannot gather up enough cash on your own to buy your first property, you may have a difficult time getting into this business; however, there are options. The first option is to look for a lender that will offer 100% financing for the deal. While borrowing 100% of the home's value is not the best route to take, it might be the only way you can get your foot in the door.
Finding a lender that offers 100% can be difficult, though, but there is another option. You could always look for a real estate investor. Real estate investors are often the people with the money. They are always looking for ways to invest their money in real estate, and you might find one who is willing to give you a loan.
If this is an idea you are considering, it's important to realize that a real estate investor might be leery of giving you a loan at first. To reduce the risks of the investor, you might need to agree to split the profits with him or her in a way that is not entirely beneficial for you. For example, to convince the investor that you are serious about this and that you will make a profit on the home, you may need to agree to give the investor 80% of the profit, while you keep only 20%.
This may not seem like a good deal to you; however, once you complete one house flip, the investor may have more trust in you. At that point, you could even out the division of profits a little more evenly.
Start With A Low-Priced Home
Another good tip to consider is starting small. If you can find a home for sale that is priced really low, you will not have a lot at risk. Once you make the purchase and fix up the home, you will hopefully make a decent profit on the sale. After repaying the loan on the house and the profit you must pay to the investor, you might have almost enough money for a down payment on another home you could flip.
Choose The Right Homes
The third, and most important, tip to consider when flipping homes is making sure you buy the right ones. To make a profit when flipping a home, the home must have the following characteristics:
- Good location – It might be tempting to buy a home that seems like a steal, but if the home is in a bad neighborhood, you may have trouble selling it after you flip it. You must stick with homes that are in good locations.
- Free of major problems – It's also important to thoroughly examine the structure and components of each home you purchase. If a home has a major problem you are unaware of, it could cost you a lot of money to fix it, and this could cost you the profit on the sale.
- Marketable – You should also make sure the house you buy is marketable. For example, if the home has only one bedroom and is in an area with all three-bedroom homes, you might have a problem finding a buyer for it at the price range you need to be at.
In addition, it is also vital to make sure you add up all the costs you will have for the home before you buy it. This includes the costs for repairs, interest you must pay, and the profits you must split. If you evaluate a home and it seems risky, look for another one.
Flipping homes is a great business to have if you are knowledgeable with home repairs, but it can also be risky. If you are interested in learning more about this, contact a real estate investor in your area.Share