One of the most common New Years Resolutions in America is to make more money. People get sick and tired of being broke after the holidays. They use the New Year as an opportunity for a fresh start. They vow to manage their money better, earn more, and save more. If you want 2018 to be a year of prosperity and wealth, you have to have a plan. You could pledge to work more hours and not spend so much on coffee, but what if you didn’t have to make such significant sacrifices? If you got involved in house flipping in 2018, you wouldn’t have to.
What Exactly Is House Flipping?
If 2018 is your year to get serious flipping houses, you must first have a clear understanding of what it is. It’s not like those addicting home improvement shows. You can’t just find a dilapidated house, break down a wall with a sledgehammer, find a vintage couch at a garage sale and sell the home for 4x what you bought it for. It’s essential to have a realistic idea of how much time and work goes into a successful flip. On average, it takes about 3-6 months to flip a house. In that time, you have to find ways to upgrade the home to make it appealing to sellers without dumping a lot of money into it. Some homes require a full gut job, while others just need a little TLC. Your primary objective is to quickly rehab the house so that it can go on the market and bring you the highest return on investment (ROI)
Rising House Prices = Higher ROIs
The house-flipping trend died down following the housing crisis in 2008. But now, home prices are rising, and homeowners are jumping on the opportunity to make some significant cash. Recent reports have shown that there was a 3% increase in homes flipped last year, reaching a 10-year high. House flipping in the early 2000’s involved people buying a house and then sitting on it waiting for the price to rise. Now, however, house flippers are getting their hands dirty and doing major upgrades to increase the value of the home. This allows them to make more money and sell homes much faster than before. Even if the flip doesn’t work, buyers at least make a little money in the rising equity of the home.
Step 1: Do The Research
Before you jump into your New Years Resolution of making more money, there is some work you need to do. The first rule in House Flipping 101 is read everything you can get your hands on. Educate yourself about flipping houses and listen to podcasts. You could even take an experienced flipper out to lunch and pick their brain! Read articles and blogs about house flipping. The more you know, the more confident you’ll feel when you get started.
Step 2: Find The Right Location
Part of your research should involve finding the right neighborhood for your investment. Find out where people want to live and what kind of houses buyers are looking for in this area. Don’t settle for a sketchy area just because the house seems like it’s a good deal. Buying a home in a less than desirable area will cost you more in the long run. The longer it sits empty because buyers don’t like the neighborhood, the more you’re paying in monthly fees to maintain it. Be familiar with real estate market trends in your area. Don’t assume that the upgrades and marketing strategies that worked for real estate in your hometown of New Jersey will work the same for the South Tampa homes or the Miami investment property that you’re thinking about flipping. Each city, state, and neighborhood has a particular audience, and if you don’t give them what they’re looking for, you’ll waste a lot of time and money.
Step 3: Get Your Finances In Order
Once you know what you want to do, you have to get all of your financial ducks in a row. This means improving your credit score if it’s low and acquiring the cash required for a down payment. This way, once you find the perfect house, you can make an offer right away. Be realistic about how much house you can afford. The less money you put into buying the home, the more you have to spend on upgrades.
Step 4: Work Smarter, Not Harder
2018 could be the year things really change for you financially, and flipping houses could be the key to that success. Here are a few tricks to make 2018 a high performing year:
• Focus on reducing hold times- see how long it takes you to flip your first property and then aim to reduce that time for your next flip. As you gain more experience, you’ll be able to cut down on hold times and save money
• Negotiate Fees- if you really look at all the different little fees you end up paying when flipping houses, you’ll be surprised at how they add up. Negotiate deals with vendors; see what you can do to reduce the fees in aspects such as appraisers, insurance lenders, and contractors.
• Pay really close attention to your taxes- Or hire a professional to do it for you. Novice investors miss out on tens of thousands of dollars every year in real estate related tax breaks and deductions.
• Similar to striving to cut hold times; focus on setting a realistic budget and sticking with it. As you flip more houses, you’ll begin to learn tricks and tips to save money during a renovation. The smarter you can be with your money up front, the more of it will be returned to you after the home is sold.
Step 5: Build A Solid Team
While losing weight and learning to speak a language are new years resolutions that you can do on your own, being successful in real estate is not. You need a strong team of industry professionals to ensure your success. A real estate agent, licensed contractors, an insurance agent and an accountant, are all vital in making sure each flip is done correctly. Start building your team now so that once your offer has been accepted, everyone can get to work.
Starting January 1st, you have 365 days of potential in front of you. Whether you decide to pursue your dream of flipping houses or not, the days are going to come and go. You can either let another year go by where you let fear and uncertainty hold you hostage, or you can jump in, learn as you go, and experience the excitement that makes flipping houses such a draw for investors all over the world. 2018 could be the year you take a chance, do something that makes you nervous, and earn a steady stream of passive income that could change the course of your life. You decide.
Original article found at: https://realtytimes.com/advicefromtheexpert/item/1007077-5-simple-steps-to-flipping-houses-successfully-in-2018?rtmpage=kaya