Learn How To Maximize Profits When Flipping Houses
Flipping houses is the term for buying and selling real estate at a profit in as little time as possible. You find houses that need repair, fix them up and then resell for the maximum price. The process of flipping real estate has become more popular with the recent boom of television shows that portray how easy it can be to make money by fixing up a house and then selling it. Sure it can be a profitable venture, but there are several things to consider in order to maximize profits and minimize expenses when flipping houses.
- Timing Is Everything. Buy low and sell high is a rule of thumb in house flipping deals. You want to be aware of the best time to buy when prices are low and the best time to sell when home values are increasing. In order to make the most money on real estate transactions, you have be patient and wait for the great deal to come along. The less you buy in for the less you are risking.
- Overestimate Your Budget by 20%. There are so many things that can go wrong in your plan from contractors that don’t show up to weather delays and more. If you allow for the unexpected expenses that are likely to occur, you will be much less stressed. It is better to come in under budget with a surplus of cash then to end up over budget and have to try to scrape up more money to meet the extra expenses.
- Maximize profits. Try to find houses that have a minimal amount of work so you can get the fix ups done with less time and less money. You have to set up a timeline so you stay as close to budget as you can. Do the work quickly and flip it quickly so you don’t have a lot of overhead expenses.
- Location. Location. Location. In order to make the most money by flipping houses the location of the house is detrimental. Home resale values depend on the neighborhood. If it is located in a more popular neighborhood it will be more likely to sell quickly and at a higher price. It is very important to know the market. Run some comparables of what homes have sold for so you can get an idea of your resell price.
- Do your homework. Be aware of all the extra costs involved in flipping houses. You’ll be required to have insurance on the house during the time you own it. If you are taking a real estate loan for the investment, you will have to pay loan fees and interest. Utility costs for the short term ownership are also to be included. Additionally, other things that you may need to consider are appraisal costs, real estate transaction costs for both buying and selling, building permits, landscaping costs and property taxes.
The key to making money at flipping houses is to know the risks involved with the goal of turning the most profit possible. If you consider the facts outlined above you will have your best chance of building a financial income stream by buying, fixing and selling houses.