If you look at the market and listen to the nightly news you will hear a lot about the sorry state of the real estate market and that realtors are not getting any good commissions real estate. After you have listened to this information several nights or weeks you might think you could buy a few of these houses that languish on the marketplace and do a quick fix then resell them for a nice profit. Well before you begin to take this further you really need to assess some of the realities of the house flipping arena so here are some house flipping tips.
Tip #1) Always Make Sure You Do Your Research
Whenever you enter a market that you are not totally familiar with such as the real estate market you will need some house flipping tips and house hunting tips because the real estate market can be volatile and realtors don’t make those commissions real estate just by sitting at their desk looking through homes for sale on their computer. To that find me a house question you don’t want to pay out commissions to a realtor so you have to research the market yourself.
Tip #2) Get A Clear Understanding Of The Market
When realtors make commissions real estate it is because they have studied the marketplace and understand it. If you plan to look for house hunting tips and also understand those taxes real estate if you sell or flip a house you need to do your market research. Too often that perhaps overused phrase location, location, location is not understood. A real deal when asked to find me a house in the wrong neighborhood is not a real deal after all in many cases. The reason if it is not in a desirable neighborhood it will languish on the market for a long time and someone has to pay those carrying costs.
Tip #3) Really Understand All Of The Carrying Costs
When you are looking for house flipping tips many of them are similar to house hunting tips which includes knowing how what sort of taxes real estate you may incur when you do sell the home. There are several carrying costs which you must pay for every day the house is not sold. These include taxes real estate, any mortgage fees and interest, the utilities which must be on to both work in the house to rehab it and to sell it, and any maintenance costs over the actual rehab costs. So when looking to find me a house to flip make sure you know the carrying costs including any commissions real estate.
Tip #4) Understand How Much Cash You Really Need To Do The Job
One of the important house flipping tips and house hunting tips is what to expect for a down payment. Housing loans today are becoming harder to get which is one reason realtors aren’t making those commissions real estate like they used to. When looking to find me a house remember if you go through a realtor the selling costs must be included in your budget as do the taxes real estate. Besides the down payment you will also need at least a years worth of money saved to pay the carrying costs and also to live and rehab the house too.
Tip #5) Learn And Understanding How To Find Properties
Houses for flipping don’t just sit on the market waiting for you to come along. You are not the only person who is looking to find me a house to flip out there. You have to do legwork to find desirable locations that when rehabbed can be flipped quickly. Location is important. SO when considering house hunting tips make sure the location is somewhere people will want to live.
Tip #6) Know The IRS Complications
If the IRS considers your house flipping to be a business then one of the house flipping tips is to really consider the taxes real estate that you may owe. If it considered by the IRS as an investment then you may have to pay either long or short term capital gains depending on how long it took to flip the house.
Tip #7) Understand All The Rehab Steps
When you are rehabbing a house to flip you need to understand exactly what can be rehabbed and what can be left along. Just painting walls is not the answer because you have to make the house worth what you are going to ask for it which must include all of your carrying costs.
Tip #8) Be Prepared For Possible FHA Complications
The FHA imposed a law a few years ago regards to house flipping. It was FR 4615. At the moment that law is waived until December 31, 2012. If the waiver is not extended you must be careful if you are buying and selling HUD or any home which might need a FHA mortgage insurance on it because you will have to wait over 91 days to actually close that home sale.
Tip #9) Are You Going DIY OR Hiring Contractors?
If you are not an experienced home remodeler then you will have to pay a contractor to do the house for you. This is more out of pocket money you will have to recoup when the house is listed for sale. Also if you don’t have contractors you generally work with they may require a substantial payment before they begin the rehab. So more out of pocket that can’t be recouped until the house closes.
Tip #10) Hold ‘Em Or Lose ‘Em
If the housing market goes really soft and you can’t flip the house you have to have the cash to hold it until the market returns. This means insurance costs, maintenance costs, utilities, and if you took out a loan, interest costs for as long as the house remains unsold. Also generally contractors want to be paid in full even if the house doesn’t sell or they have the right to place a lien on the home. Flipping is a risky business so be prepared with lots of cash or resources.