Investment properties can be one of the most lucrative business ventures that can set you off on the path towards financial independence. When you go into the business of investing in properties, flipping a home can be one of the best ways to get started. Flipping a home is a simple concept, but there are a few things you should know before flipping a home. Essentially, you purchase a home that needs renovations or a remodel for a low price, you fix up the property, and from there you can decide to rent your property out with the help of a qualified property management company like Gavish Property Management, or you can put it on the market for a quick return on your investment.
Before you get into the business of flipping houses, you need to identify properties that are worth the investment. In most cases, unless you are dealing with your own money, you will need to have this venture funded by investors. When you are dealing with investors you should keep in mind that they are only looking at the numbers to determine whether their investment carries a high risk or a high reward.
In order to keep profit margins high, investors will need a low purchase price in order to justify the investment.
When it comes to any investment, time is money! There are many time-sensitive factors that you need to consider when you are flipping a home. Before flipping a home, you should have a good idea of what your budget is and what the timeline of the project will be. What is the target date/season that you would like to sell the property after the flip? Are there contractors in the area that are available for hire during this time? And finally how efficient can the necessary upgrades be scheduled and completed within the time frame?
When you set out your house flipping project you will want to have a detailed timeline that accounts for those factors with additional wiggle room for any delays that you cannot control.
Flipping houses has become very popularized by television shows that make you feel like it’s a walk in the park. Demolishing a house looks like fun and installing cabinets looks easy, but not everyone knows what they are doing and it can cost serious money! It’s generally a good idea to leave the work to professional contractors who know how to do plumbing, electrical, and who won’t damage your property. Mistakes will cost you money which will cut your profit margin down drastically.
Unexpected expenses, like mistakes that we mentioned, can eat at your budget which ultimately cuts into your profits. To avoid this you should add padding to your budget to account for mistakes, delays, and unexpected increases in the cost of materials. Be sure to do all of the planning early on before flipping a home and you will save yourself a lot of trouble later on!