4 Tips for House Flipping Beginners
These days, more and more people are getting involved in real estate by flipping houses. If you already have experience in renovating homes or running a business, perhaps you’ve already considered how flipping houses would be a great way to invest in your retirement. It can be a challenging business, but getting started is much easier once you know the basics.
Start with these tips from Post Pros Nashville.
Where To Look
Flipping houses requires you to know your market and where to look for homes to renovate. Areas should have low crime rates and good schools. Although it may be tempting to look in the priciest neighborhoods for bargain homes, it is savvier to look in areas that haven't quite peaked yet but are growing. Real estate experts recommend areas with a low price-to-rent ratio, ideally below 15. Homes in such places cost less to buy and less in taxes for the duration you keep them, and are likelier to be purchased quickly as families and young professionals try to move in.
What To Look For
Look for houses that don't have serious damage but could use some major updates. Danger signs to avoid include cracks in the foundation, issues with piping, hints of widespread mold or pests or outside factors like a very run-down house next door.
Instead, look for homes that have out-of-date carpet, ugly paneling, popcorn ceilings and other superficial factors that are not particularly costly or difficult to alter. Big results from (relatively) small changes equal success.
How To Pay For It
It's possible to buy homes outright with cash. This can be especially useful for purchasing foreclosed homes at a bank or government auction. There are potential drawbacks to homes bought at auction, including lack of time to inspect the property prior to purchase, but they can also be very lucrative because they often sell for much lower than they are worth so they can be unloaded quickly.
Both houses bought at auction and traditional purchases can be funded through investors. If you don't have any investors lined up, you can find them in your community or even online.
Hard money loans are another way to fund your house flipping business without taking on investors or being independently wealthy. These loans are different from traditional loans in several ways. They have higher interest rates with shorter terms, but this makes sense for house flipping because you usually only keep the house for the time that it takes to renovate and sell it. Hard money loans also aren't based on your credit as a borrower; instead, they use the home you are purchasing as collateral so that if your loan is defaulted on, the lenders can just sell the property and cut their losses.
How To Delegate
As tempting as it is to try to do everything yourself, successful house flippers and business people know better: delegating is crucial. It doesn't make good financial sense to handle every aspect of flipping yourself. Instead, take an honest account of your strong suits and designate tasks you are less comfortable with to others who can perform them more quickly and correctly.
This includes financial tasks such as payroll, which can be complicated for those without experience. You should consider investing in an online payroll service to take care of paying contractors and employees for you. You can also outsource things like your registration with the state. Look up LLC application TN information, and then work with a formation service to help file all of the necessary paperwork.
When you have the foundational knowledge you need to succeed, house flipping is a straightforward and satisfying way to earn a pretty penny in your retirement. Take these tips and get on your way to house flipping success today.
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