It doesn’t matter if you want to flip houses to make money on the side of if your goal is to be a professional in the business. For those who are starting, there are some critical facts that might not be obvious to you just yet.
The two main aspects involved in this market are time and money, which should always be considered together. Knowing how to manage both can be the key to avoid some pitfalls that most inexperienced flippers can’t avoid.
Here are the top five facts you shouldn’t ignore about house flipping:
Top 5 Facts About House Flipping You Need to Know
1. You don’t need loads of money
Even distressed houses aren’t sold for a low price. That and the fact that house flipping means investing more money on expensive services make people believe you need to be rich.
However, that can be considered a big myth. You can generate a considerable profit without a large budget at the beginning. Getting a fix and flip loan or finding an investor works just like for any other business.
The first thing to pay attention to here is that the product is a property. Therefore, your chances of getting a loan using it as security are higher than when you begin some other type of business.
2. Don’t fool yourself: there is risk involved
It’s a real estate venture, and the market is always questionable, no matter how much you think you know about it. Although it’s not possible to know all the risks in house flipping, you should at least know the most relevant ones.
The most important rule to avoid risks as much as possible is to plan everything thoroughly. From the business plan to defining your trajectory and long-term planning, you can reduce many types of risks.
3. Focus on the location
It’s vital to understand that buying a cheap house that can’t be sold afterward is a pure loss. Give it a lot of thought first, and consider if there are buyers in the area and if they would pay you what you need.
Check statistics from the county or municipality, discover how the real estate market is working there, and other aspects. By doing so, you avoid buying what seems like a bargain but will remain a vacant property that cost you a great deal, and you can’t sell.
Use the internet in your favor and look for hints on how to evaluate houses. That way, you avoid another mistake that would be pricing a home the wrong way.
4. Too much damage is not good
It’s clear that the more distressed the house you find, the lower the price you will have to pay for it. However, without evaluating all costs involved in the repair, you might be choosing a bad deal for your business.
Forget those that are destroyed. If you are not capable of determining if it’s suitable— and you should be honest about it — find someone to give a specialized opinion.
5. You are not alone
That’s a fact, and you shouldn’t enter the business thinking you’ll be able to carry out the business all by yourself. You might need a partner or an investor, but contractors or service providers will make a difference, too.
Their specialty will make the final work look more professional — and expensive, by the way. Also, you’ll ensure that someone can be blamed for the job if anything goes wrong.
What looks costly from a particular perspective can actually be cheaper. Imagine having to change a lot of things because you weren’t able to do it, or because you hired the wrong but most affordable people you could find.
Take a look at how to assemble your house flipping team, so that you’ll know what to look for afterward.
TV shows and forums make the house flipping business seem easier than it is in reality. Fortunately, there is a lot of guidance in the digital world too, providing you facts about becoming a house flipper.