Real estate remains a lucrative business. One focus in this line of work is 'flipping houses', which is where you buy a house, upgrade it, and sell it for a profit within a short span of time. It provides you an opportunity to get creative and reinvent the house to raise its value. Time is of the essence in such instances as you look to sell the house immediately to reap profits. The longer your house stays on the market, your investment remains locked.
The idea behind flipping is simple: buy low, add value and sell high. However, there are several other aspects that come into play that you might not be aware of as a novice investor. So, if you’re looking for a flipping-a-house checklist to ensure your investment stays on track, read on.
Choosing the right location for house flipping is the most essential step. A seller’s market where properties sell like hotcakes is ideal. Conduct research about the areas in demand, the proximity of schools or hospitals, the crime rate in the neighborhood, etc.
You should also research the price trends in the area. Keeping your budget in mind, look for houses that are cheap or have gone through foreclosures.
Once you’ve found the perfect property for investment, confer with a local real estate agent. You can ask for the agent to come down to the property and conduct an assessment. This will answer questions like - Could the house be made marketable? Will you be able to make a profit? What are the trends in that area? The agent can provide valuable insights as they are well aware of the local market.
Taking opinions of real-estate agents is necessary, but so is taking the opinion of the home inspector. The inspector will assess the condition of construction, home systems, and appliances and provide a detailed report. You can ask for timelines and repair costs for each project that you need to work on. This will help give you a fair idea as to how much remodeling the house will cost.
The general rule of thumb is to ensure your investment does not exceed 70 percent of the after-repair value of the property. This investment should exclude the repair costs that you need to put in.
After doing your due diligence selecting the property, it’s time to negotiate a deal. If the quoted price is below the 70 percent threshold, you can proceed to make an offer. Otherwise, use your negotiating skills to get the seller to agree on a fair price. While negotiating, you can quote to the seller the average cost of homes in the locality, expenses you will incur with after-purchase repairs, etc.
Discuss what fees or plans, such as insurances or real estate commissions, are included in closing costs. You could also try inquiring if a home warranty is included, as it will help reduce unexpected repair costs of appliances or systems breakdown. If it isn't, you can ask for one purchased from a reputable home warranty company.
After negotiating and making an offer, you should get your renovation plans ready. Research what buyers want in the house. Consider what amenities they require, upgrades such as home security, smart home features, etc that can up the value of your home. [If you want to learn more about guaranteed rent in Romford, click for more information.]
Your renovation plan for the house should also be ready. Plan the layout, the decor, furniture, and everything else that needs your attention. Have a crew ready to handle these projects before the deal closes.
You should get an experienced contractor to handle the repair work. Certain repair projects might require permits, so take care of that beforehand to avoid delays. Align your utility bills and consider putting them on autopay so that you do not have to worry about paying them on time. Keep a regular check, possibly twice a week, on the progress of the renovation work. This will motivate the crew to work diligently and complete work as per schedule.
For selling your home, you will require a listing agent. Read reviews and gather recommendations about the best agents in the locale. Have a talk with them to explain your interests and requirements. Once you’ve hired the agent, keep them updated on the status of your renovation projects. This will help establish a timeline for the sale of your home and help the agent prepare his plan.
You can have the contractor perform thorough inspections of the completed renovations. Your real estate agent should be able to help you with value additions. Make a note of little details that require attention before completion. Talk to your contractor and get the finishing touches done. When the renovation is complete and the crew has left, you should get the house cleaned. Now your house is ready for listing.
Take a breath before you list your newly-renovated home for sale. Make your house more welcoming for the buyer by adding new furniture, wallpaper, decoratives, etc. Buyers are generally interested in the bedroom, kitchen, and living room of the house. By staging your home, you will be able to fetch a better price for your home.
Once your house is ready, click eye-catching pictures of your property. You can even film a video tour of your house as it’s trendy these days.
Pricing is critical for flipping houses. You should set a price that aligns with the listing trends and provides you return on investment. Consult your real estate agent for the pricing evaluation. If your house is costing more than other listings, without good reason, there is a chance your house might stay on in the market for an extended period. A delayed sale would mean additional costs for insurance, home warranty, utilities, repairs, etc. Hence, it would be best to provide a deal that attracts buyers right away.
Once you start getting offers, get ready to have negotiation talks. Do your homework and have an end-price ready that will fetch you a profit. You should keep this price in mind when negotiating with the buyer. Take your time to thoroughly review and evaluate the buyers and their offers. Double check on what deposit they offer, how much they’re willing to pay as down payment, and if they’ve been pre-approved for loans. Select the best suited offer and proceed with the closing of your deal. Hopefully, you will manage to make a decent profit with the sale.
Keeping a checklist handy makes the process of flipping a house easier for beginners. It ensures that your investment is on track and you reap profits at the end of the transaction.
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