If home makeover shows always make you wish you could do that too, house flipping could be perfect for you. It’s a great way to flex your creative muscles, and you could make some money while you’re at it. Here are tips on how to start house flipping.
What Is House Flipping?
Flipping a house involves purchasing a property, typically one in disrepair, fixing it up, and selling it for more than you paid and put into renovations. House flipping can also refer to buying already renovated homes in up-and-coming markets and reselling them when their value increases; however, this article is all about the fixer-uppers.
Research the Market
If you are new to the house-flipping world, you may be unfamiliar with neighborhood classes. Many real estate investors rank neighborhoods from A to D based on factors such as location, nearby schools, and average home size. If you’re hoping to flip million-dollar houses, it won’t make much sense for you to browse the Class C or D neighborhoods.
Getting a sense of the area is an excellent way to determine who you may want to tailor the home to. A neighborhood with excellent public schools will appeal more to parents with young children, so keep that in mind when you’re planning your renovations.
Insurance rates will also vary based on neighborhood class. Flipping homes in Class D neighborhoods might be an affordable investment, but premiums will be higher. For flippers just starting out, Class B and C neighborhoods are typically the right fit.
Planning Your Budget
Knowing the upper limit to your investment capital makes good financial sense. A home that will cost you more than you’re willing to invest could lead to some risky financial decisions before you see a payoff, so stick to your budget.
Aside from the cost of the house, you will need to allot funds to renovate and make any necessary repairs. Providing a move-in-ready property is ideal because buyers don’t look favorably on fixer-uppers.
Affording the Property
All this talk of investments and starting capital can be daunting, but don’t worry. Several services are available to assist people looking to start investing in real estate, so consider a reputable provider of property loans to help you get the ball rolling.
With all the financials out of the way, the best part is up to you: making those houses into homes. Use these tips on how to start house flipping, and get creative!