First Steps to House Flipping
So you have thought about investing in a property to flip. All of those shows on TV make the process look super easy, right? Find a cheap house, make it pretty again and then sell it for lots of money. But that's not the case. The house flipping business can be pretty tricky, especially when you're first starting.
There's a few things you need to have first before you start looking. First, you will need to have a great credit score. Lenders have tightened their requirements for loans and the better your score, the higher chance you have of a getting a good deal with them.
Next, you need to look at location of your property. Is this a growing area? What are the surrounding houses (also known as comps) going for? You should look at all of this before you close on a property and begin the renovations. You don't want to invest all of your time and money into a house that won't sell in an area because it's way above the surrounding market prices. Also, it's smart to look at the surrounding schools, businesses and job potential. Homes in these areas will sell faster and easier.
Most house flippers don't think about this, but the house needs to be in sound condition. You wouldn't usually think about this because you're going to be updating and repairing the house anyway but, sometimes a house isn't worth your time and money. Foundation issues, plumbing and electric, etc can become very expensive very fast. Not everyone has a ton of wiggle room in their budget when first starting out.
To make sure you make money, check the value of the house. Make sure when you buy, it's below it's market value. This will insure after all of the updates and renovations it will sell for more than what you bought it which means you will make a profit.
Don't get discouraged. Everyone has to start somewhere and chances are your first project won't sell immediately. But that's okay. This business requires a lot of work and patience sometimes but also extremely rewarding in the end.
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