House flipping is when a real estate investor purchases a property with the intent to renovate it and sell it for a profit. These properties are typically dated or run down so they can be purchased at lower prices. There are some risks involved with house flipping that everyone should be aware of. However, if managed correctly, there is an opportunity for substantial gains to be made by investors.
Keep reading for the five tips every first time home flipper should know to help ensure they are successful.
Having a Team of Professional Help
As housing flipping can be complicated, it’s important to have a team of professionals you can consult for help.
While house-flipping is legal, a lawyer should still be involved. An attorney will ensure you don’t break any of the laws that surround the house flipping process.
A real estate agent will help you find a home to purchase and offer insights into the local market.
A home inspector may be required if you are purchasing a particularly run-down home. Home inspectors can advise you of any outstanding issues that will make the property a poor investment.
An insurance agent is necessary to purchase home insurance. If something goes wrong during renovation projects, your investment will be protected.
An accountant can help you with taxes and budgets surrounding the entire house flipping project.
Know the Local Market
A large part of house flipping is grabbing an opportunity at the right time. Turning a run-down home into a beautiful property in a bad neighborhood will not generate significant profits. If you don’t have an understanding of the local housing market, you can rely on your real estate agent.
You’ll also want to be aware of local housing market trends. If the housing market is particularly hot, you may want to wait for prices to settle. Purchasing when the market is high, and selling at low, is the worst-case scenario for a house flipping project.
Your house flipping project will cost more than just the property purchase. Costs will include the renovations, fees from accountants, legal team, real estate agents, workers, and the selling costs. All of these costs should be factored into the project to ensure you make a profit.
If you’re a first-time house flipper, you may not have the capital to purchase the investment property on your own. You’ll need to conduct some research on how to secure a real estate property loan.
Hard money lenders specialize in real estate investments and usually offer “fix and flip loans.” The right hard money lender will approve you quickly, at a great rate, so you don’t miss investment opportunities. For those in the Texas or Tennesse area, Wild Cat Lending is a top choice for real estate hard money loans.
Experienced house flippers eventually have the process down to a routine that runs itself. For the first-time house flipper, the process will take time. You will need to source relationships with contractors, loan lenders, real estate agents, and more. With every professional, you will want to do research. These people can be the difference between a small or large profit for you at the end of the project. Have patience and be prepared to put time into this project.
House flipping is a lucrative opportunity if managed properly. Start your first step towards house flipping by contacting a hard money lender today. Wildcat Lending has an office based out of Plano, TX, and has been providing “fix and flip loans” for the Texas and Tennesse markets for years. Contact Wildcat Lending today to find out what you can qualify for.