Flipping houses can be a great way to make money, but you can also lose a lot of money if you do it wrong. Fortunately, there are tons of resources in books and online that can help you master the art of flipping houses. Get started now with these seven tips for a successful house flip.
1. Learn the Market
If you want to invest in real estate, you need to understand the market you’re investing in. Real estate markets change quite a bit from city to city and state to state, and the market also changes depending on what’s going on in that region. One of the best ways to make sure you succeed when it comes to flipping houses is to do plenty of market research.
2. Understand Financing
Financing is another important aspect of flipping houses; after all, you need to have a way to pay for the home you’re investing in. Before you consider flipping houses, read about some of your financing options and consider talking to banks or mortgage lenders. When you connect with the best hard money lenders Arizona, buying a home is much easier.
3. The 70% Rule
The 70% rule is something every investor should consider when investing in real estate. This rule states that you should pay 70% of a property’s after repair value (ARV) minus the cost of repairs the home may need. For example, a home with an ARV of $200,000 and repairs that cost $20,000 should be purchased for about $120,000 for a successful house flip. While that might seem like a difficult price to get, that should be your goal.
Whether you’re buying a house or shopping at a garage sale, negotiating is key to making sure you’re getting a good deal. While sellers don’t want to go too low on their prices, it’s smart to negotiate a little bit and see what you can save. Even saving $5,000 could make a big difference when it comes to your profit margin. Plus, saving money is important no matter how much you have.
5. Know the Costs
Investing in a house flip can get expensive quickly, so know the costs you could potentially face and make sure you’re ready for them. Repair costs are one of the toughest things to gauge if you don’t have expert help or experience. With the cost of building materials rapidly increasing, it’s important to carefully calculate repair costs so you don’t lose money.
Flipping houses isn’t as easy as buying a house, fixing it up yourself, and selling it for a profit. If you want to succeed in the house flipping business, you need to have connections in the real estate industry. These connections help you get the lowest prices. It also helps to have a network of contractors you can reach out to when it comes time to repair a house. Social media can be a great way to network in the real estate business.
7. Find a Mentor
Getting started with flipping houses can be a bit overwhelming, but it doesn’t have to be. Try to find a mentor who can help you learn the ins and outs of house flipping. Having a mentor means you get to learn at a faster pace, plus you have somebody to consult for advice. And who knows, maybe you and your mentor can go into business together and make good money flipping houses.
There are a lot of things to consider if you want to start flipping houses, but you can do it with a little time and hard work. Just remember to be careful when you’re just getting started so that you don’t risk too much money.