House flipping pertains to real estate investors purchasing homes commonly at auction and then resell it at a particular profit months down the road. Many individuals have probably heard about this and the big question is; can you really make money from flipping houses? The answer is yes! You can actually make a lot however, with the wrong moves and decisions; you might as well lose everything.
How to Do it Right and How to Make Things Work
You have probably see and heard stories on TV ads and infomercials about how many individuals are now making lots of money flipping houses. Some are in doubt while many believe that this is exciting, enticing and most of all, possible.
However, there are certain important things and primary areas and components of flipping houses that you need to pay close attention to in order to do it right and make things work. These might include the following:
- Be Educated
You can never make lots of profit if you are not well educated or you lack deep knowledge about local real estate market. The only ideal means to figure out if a particular property is a good deal is to determine the real market value of other comparable properties in the area. It also pays to have your real estate license so that you will have reliable access on the local listing services. Thus paves way to two major benefits; first is giving you the access to both asking and then selling prices and next, will make you more aware about the property the soonest they come into the market. This will help you find the most profitable and real bargains.
- Purchase Below Prevailing Market
To make more money flipping houses you should purchase at big discounts. This is an important step that does not need to be taken and dealt lightly. If you are certain that the final selling price of a particular property as its retail cost, the amount that you are actually paying must be viewed as the wholesale price. Difference between these two should provide enough profit plus the room to cover the property renovations. Also, when purchasing homes to flip, you should not purchase based on your emotions and other emotional factors.
- Determine the Typical Repairs’ Cost
It is not always likely that you’re the only flipper in your area. The competition can really be fierce and bidding wars might develop surrounding well-priced real estate properties. This simply means that upon getting a good deal, you must be ready to move more quickly. You will also have an idea on what repairs are needed by the property along with the repair cost. Regardless of how good deals are, you can still lose money if purchase price along with cost of repairs exceed the home’s market value.
- You Will Need Plenty of Cash
Mortgage lenders will no usually lend over 80% of the non-owner occupied property value. So you should completely expect that you’ll need to settle a down payment of at least 20% for every property. Some loans such as 5% down and 3.5 down loans are usually available for owner occupants only and not investors and flippers. You therefore need lots of money for the repairs and more.
It is true that you can really make money flipping houses however; there are more into it and lots of essential things you need to understand first to obtain great riches.