If you’re like most people, you’ve experienced the desire to flip a house. It’s a tempting prospect when you consider the profits that can be made from this type of investment. According to home experts at ATTOM Data Solutions, house flips account for 9% of 2023 home sales. If you’re serious about diving into this type of real estate transaction, there are a few things you need to be successful.
1. You Need Source Funding and a Budget
Source funding will be the money you’re using to purchase and renovate the home. If you don’t have the cash on hand, as many don’t when they first get started, you can work with a fix and flip loan lender in your area. These professionals help people who want to start investing in real estate.
Once you’ve acquired the source funding, you’ll also need to set a tight budget. The budget you set for a house flip is much different than the budget you’d set for a home you’re building or renovating for yourself. Sticking to the budget for a fix and flip is crucial to your overall success. If you step outside of your budget too much, you want to make nearly as much profit.
2. You Need to Know the Neighborhood Market
When you’re considering houses to purchase, you need to do some homework and learn everything you can about the neighborhood. This will also have a huge impact on how profitable the transaction will be for you. For instance, there might be a great house with a lot of potential, but if it’s in an area that no one would be willing to purchase, then you might wind up wasting a lot of money. You need to be familiar with recent sales, particularly of renovated properties, and you’ll want to look at how long properties generally stay on the market. You want to know what kind of homes are selling quickly and why.
3. You Need the Best Possible Deal
Buying an overpriced home for a flip doesn’t make sense. You want to get a good deal on a house that needs a little work, do that work, and then make a profit when you sell it. The profitability of this transaction all starts with the price of the home. Homes that have costly repairs needed such as foundation, roof, electrical, or plumbing, will not produce as good of a profit for you as a home that’s a little shabby and just needs a facelift.
These are just a few tips to get you started on flipping homes. If you’re searching for a fix and flip loan lender in your area, contact us today at West Coast Commercial Capital LLC.