Thanks to popular TV shows like Master of Flip and Flip or Flop, flipping houses has become all the rage today. It’s such an interesting and easy way to make tons of money. All you have to do is buy a not-so-good-looking home, renovate it to give it a fresh new look, list it on the market, and make a massive profit on sale!
Here is the thing- flipping houses may seem easy in theory. However, to make it really work, you must have a strategy and know what you are doing. The following are a few tips that can make you successful in this endeavor:
Improve Your Credit Score
The benefits of a good credit score are plenty which include better interest rates, easier loan repayment terms, faster approvals, etc. However, it’s even more important when you want to earn profits from flipping a house. This is because you need a home loan if you want to buy a property, and to get it approved, you need a good credit score.
You can get a copy of your credit report from all the main credit rating agencies viz. TransUnion, Equifax, and Experian online to see where your current credit score stands at. If it’s not up to the mark (ideally should be above 700), then you can take various steps to give it a push including clearing your old debts, lowering the credit utilization ratio, fixing credit report discrepancies, etc.
You need lots of cash to get in the house flipping business. This is because a good chunk of it is spent on the down payment for the home loan that you need to take which can be as high as 25% of the cost of the property, and there are all kinds of renovation projects that you also need to fund. You may also want a home insurance cover to protect your investment. If you don’t know how it works and what’s covered, then it’s strongly recommended that you read more about homeowners insurance coverage in plain English on the web.
Picking a Good Property
This is perhaps the most important part of house flipping. This is because the whole point of reselling a house is to generate a profit, and you want to maximize it as much as possible. This can be achieved by doing research and finding a house that costs less but can fetch a substantial price when sold. For this, you should consider the following factors:
Location plays a big role in house flipping or even when someone is buying a property for themselves. This is because it can be rather challenging to sell a house that’s located in a bad neighborhood even if it’s remodeled and embellished with modern décor. So, look for a house that’s located near to some of the most important buildings in your city which include the main markets, schools, business parks (for the salaried individuals, etc.). Also, make sure that that the crime situation near the house is not bad.
When the condition of a house is poor, then you can buy it at an attractive price which makes reselling more profitable. However, you don’t want a property that requires so much renovation and repairs that the profits don’t justify the financial investment and labor.