House flipping is a tried and true way to make money with real estate. It offers investors great returns, and it can also serve a launchpad for other types of investments. However, there are many aspects to home flipping that you should be familiar with if you want to find success with it. Continue reading to learn about some of the things you’ll need to know if you’re planning to flip houses for profit.
Have a solid plan and budget
Every successful real estate deal starts with a good plan. Having a plan for your project doesn’t just make you more likely to turn a profit, but it can also help you qualify for financing. A lender is more likely to approve you for a loan if you have all your ducks in a row and a good idea of how you want the project to turn out.
Besides a plan, you will also need to create a budget and timeline that’s as accurate as possible. Sticking to your original plan will help prevent overspending during the renovation stage of your flip, and can keep you from falling behind schedule with the project.
Get a pre-purchase inspection
One thing you should do before you purchase any real estate property is order a home inspection. There are all sorts of hidden issues that a property may have which can slip past the untrained eye. With flipping, while you are looking for a property that you can improve through renovations, you don’t want one that will require so much work that it eliminates your profit margin. There are also major issues you’ll want to avoid like damage to the foundation, which can be very costly to repair. Knowing about these issues beforehand can save you from moving forward with a bad deal.
Research the neighborhood
Location will always be an important factor with real estate investing. This is especially true for flipping, because it affects how much of a return you can make with your venture. If your property resides in a bad neighborhood, you may have to lower your final sale price just to get it off your hands. Ideally, you should be looking for properties in areas that are growing and have access to plenty of amenities, as this will help increase the value of your flip. The neighborhood should also be safe, and have access to good schools to entice family-oriented buyers.
Choose the right renovations
The renovations you choose to perform on a flip will determine how much value you can add to the property. Choosing the right ones can be the difference between a very profitable deal and a barely profitable one. Generally, you should focus on low-cost upgrades with a big impact, such as new furniture or a fresh coat of paint for the rooms. Pay special attention to the kitchen and bathrooms as these areas tend to show their age more than other rooms, and any updates you make to them will have a good return. Most importantly, try to make renovations that you know will have broad appeal so as not to turn off any potential buyers.
Work with a reliable team
A good team will prove to be essential in making your investment profitable. Good contractors should be able to complete work on time and on budget, and if you aren’t sure about somebody then don’t be afraid to ask for references of past work. A quality real estate agent will be important for selling your property at a fair price so that you can make a good return, and a tax professional will help ensure you keep the most of that return. There will be other professionals you work with throughout the flipping process, and taking care to find quality professionals can really make a difference with your venture.
Do you have a real estate project you would like to obtain financing for? RCN Capital lends to real estate professionals, commercial contractors & developers across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. If you’re looking to acquire financing for a home flip, RCN Capital has competitive loan options available. Connect with us today to discuss your next real estate investment.