The housing bubble of the late 2000’s is long over, the housing market is on the rebound. With the current upswing maybe you have thought about entering the market, or are even looking at ways to start a new business by getting into real estate. There are lots of angles into the market: becoming a landlord and renting, going from renting to owning, but perhaps the most popular is house flipping.
Just what exactly is house flipping? House flipping is where a buyer purchases a home below market value for the area, renovates, improves and puts money into the house, and then resells the property for a profit. Sounds easy right? Well before you bring out your checkbook there a few things to consider.
- Do you want to renovate it yourself or hire a contractor?
If you are a good handyman and want to learn more skills and can take your time doing quality work, and want to maximize profits, then doing the renovation work yourself may be worth it. Be sure not to bite off more than you can chew and look for a property with a level of work that you can handle. If the DIY approach isn’t your style then be prepared to hire at the very least a contractor, if not an architect to join your team. Look for a contractor you can trust and build a relationship with as you will be trusting each other a lot in this process and putting a considerable sum of money between you. Have your renovation strategy completed before even looking for a property, otherwise you are just wasting time while the property is listed, and therefore money.
2. Do you want to take the time to become a licensed realtor?
Also to your advantage is to become a licensed realtor. You will save considerably on commission fees if you can work as your own real estate agent. The fees for buying a home are around 3 percent commission, when buying a house for 100,000 that’s 3,000 dollars. And then when selling the property, for more money say 200,000, there is about a 6 percent commission fee, that’s 12,000, for a total of 15,000! That’s 15,000 dollars of your money, and easily offsets the 1,500-2,000 dollars it costs to become a real estate agent. Now it isn’t exactly easy, it will take a lot of work and you won’t become an agent over night, but the investment is worth considering if you plan on flipping multiple properties.
Figure these steps out first before going on to the next phase of securing capital for your house flip, and then actually finding the property. The more you have planned, the more successful your flips will be!