Property flipping is when property investors buy houses (usually at auction as they can buy houses at below market price), fix the houses, and then resell them at a good profit. Can you make money by doing this? The answer is yes. Can you make a lot of money by doing this? The answer is yes. But you can also lose everything that you have, if you buy a wrong house from the beginning.
So, what makes a good real estate investment and what should you look for in a potential house flip?
➊ Location
Location, location, location…Location is extremely important when buying an investment property. Find a house in a desirable neighborhood or in a city can make property investors stressed out. In today property market, finding a superior location can be a challenge. But, don’t worry, you can still buy a house to flip but you just need to be more careful. Start by researching and study local cities and neighborhoods. Look for areas with employment growth, living style, potential rising property sales and other indications that the town will rebound from the recession.
➋ Sound Condition
You don’t need to tear down the entire house and rebuilding it from scratch. The main key of property flipping is to look for structurally sound houses. You may not have the chances to running a proper inspection, especially if you buy the house at property auction. Therefore, you need to learn what to look for, for instance, bring someone knowledgeable about building, electric, and plumbing with you to look at the house, to determine whether the house is structurally sound.
➌ Good Schools Nearby
If there are some good and reputable schools in the area, the percentage of selling out the house is very high.
➍ Do The Right Fixes
After you bought a house, you have to plan a renovation work for it. For home repairs, it might include replacing the old doors, update the old kitchen (will discuss it specifically in next point), rewiring, renew plumbing system, roof replacing and etc. Keep in mind that put the updates and repairs at your priority of works, then think about the decoration later.
For home improvement, you can installing the carpet or flooring, paint the wall with fresh new color or install wallpaper instead, installing outdoor motion sensor lights and other improvements that can increase the selling price of the house. Remember, all the improvements must fit in your budget. By the way, you will have to set a budget for both home repairs and home improvements. When setting a budget, it is advisable to add a 20% to the final estimate the cost of any jobs. Why? It’s always going to cost more than you think it will, say the experts.
(Click here to read: 6 Renovation Tips When Buying An Old Property)
➎ Nearby Your Area
You will work on this house in upcoming daily weeks and months. It is advisable to buy the house that nearby your living area, as you can check on the work progress when on the way home. Don’t invest in a house too far away from where you live because you will spend more money on gas, and it will take longer to fix up the house.
➏ Analyze the Kitchen
Kitchen, is the most important part in the house. Every homebuyers will first to check on the kitchen, at the visit day. Pay close attention to this area when you buy a house, whether this kitchen needs you a lot of money to remodeling. It is advisable to focus on remodeling the kitchen and then look into bathroom redesign ideas, according to the experts. Set a budget for this area, and do the research on how a kitchen design and layout that can attract more future homebuyers.
➐ Value
Make sure the price of the house is below market price. Otherwise, you will not make money from selling out. Try to buy the worst house in a great neighborhood, versus the best house in a bad neighborhood. The worst house in a great neighborhood has a very high potential to raise its value, due to the value of the other houses in the area!
Last but not least, although you can search online and see there are millions of foreclosed/ auction houses for sale, never buy a house without seeing it in person. This is the biggest mistake that new property flippers always make. Remember, the online photo gallery can’t tell you if it is located in a good neighborhood and the actual property condition, and don’t forget there is a software in the world that can beautify a photo no matter how lousy it is, its called “Photoshop”. Always do your own due diligence on that property before deciding to buy.
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