Knowing how to flip a house can be financially profitable for those who understand what they are doing. In fact, recent information demonstrates that the average profit earned on a flipped home is over $70,000, and works out to be over 30% return on investment)!
That is a nice way to make a living, especially if you can learn how to flip a house every 2 or 3 months. However, if you are new to the house flipping business, you will need to work your way up to earning profits like that.
Here are a few things to know when considering how to flip a house for profit.
Know The Best Location
When it comes down to knowing how to flip a house, few things matter as much as the good old law of supply and demand. When you think about how to flip a house, you need to buy low and sell high (or for at least more than you’ve invested). In order to maximize your opportunities, you also need to know which locations are attractive to potential buyers.
The markets with the best potential for house flippers are areas that are considered “up and coming”. In other words, there are a number of low-cost, distressed properties, but also the potential for industry, employment, and demand for houses that have been recently renovated and are affordable.
Find A House That Can Be Fixed Up Fast
When considering how to flip a house, make sure you chose one that only requires surface repairs. For example, new carpet or a new coat of paint. I would recommend avoiding any house that has plumbing issues or issues with the foundation – those are potential house flipping disasters!
There are other low-cost, fast options for house flippers to consider – all of which add value to the selling price of the home. Consider adding new kitchen counters or a new bathroom toilet and vanity; maybe add ceramic tiles to the kitchen. Regardless of what upgrades you make, make sure you determine the total cost of your project; use a house flipping spreadsheet for the most accurate estimates.
How to Flip a House in Less Than A Month
The faster you get the house back on the market, the faster you can sell the house. The longer the house sits unfinished or unsold, the more money you lose – not only in interest, but also in lost opportunity for your next house flipping investment.
When determining how to flip a house, most experts use the industry standard of 90 days – which makes sense. Many of the big lenders, including Fannie, Freddie,and the FHA do not permit you to resell a house in under 90 days for more than 20% of what you bought it for. Research into the time it takes to flip a house indicates that the average flipped house sold in an average just over 130 days.
Consider Signing An Agent
If you are new to flipping houses, you might be able to handle the repairs and rehab projects (which will save you a ton of money), but consider letting a real estate agent handle the marketing end of your house flipping project. They know the market, are invested in selling, and will bring you potential buyers. In fact, you might have to pay a bit of your profit to an agent, but industry research shows that houses that were sold by real estate agents sell at over 10 percent higher prices.