Real estate flipping isn’t a new trend. People have been purchasing fixer-uppers for pennies on the dollar and then investing in renovations so that they can then “flip” the property and make a profit for a while now. If you do it right you could end up making a lot of money. With the real estate market just on the rebound – between economic meltdown and recovery – now is a perfect time to try your hand at real estate flipping. Before you do try your hand, there are a number of considerations you have to make first so that you can make the most money from your efforts. Here are 5 tips for making money in real estate flipping.
- Remember that the market dictates the value of a home. Even though you put money into your home, it is important to evaluate accordingly so as to reduce the risk of losing money. You could invest a certain amount in a house, but if it doesn’t improve the value of the home when it comes to market valuations, it could be all in vain. Moreover, if you add all the money that you put into the home and price it above value you could risk putting the home out of people price range. So make sure to do all your numbers and research first.
- Mind your ROI. Again, you might spend a certain amount of money fixing up a particular part of the house, but if it doesn’t increase the value of the home you are essentially just wasting money. When it comes to ROI, or return on investment, only put in money that you know you will make back. For instance, you could add a whole new level to a house, but not make back nearly enough money to cover your costs or efforts. Yet, you could spend just a few thousand dollars re-landscaping and make back 2 or three times the amount you put into it.
- It is also important to know what your buyers are looking for. You can easily click here and there online to find what some of the most popular trends are when it comes to the aesthetic of a remodeled home. One year it might granite countertops and then the next marble. In addition, if you are flipping homes in a neighborhood with a certain demographic or age, make sure not to alienate them.
- Time is money. The longer you spend flipping a home the more you are going to spend. The whole idea behind flipping a home is to make the most money possible. In this case, scheduling is crucial. Make sure that you know exactly when projects are going to be completed so that you can budget accordingly.
- Lastly, one of the biggest ways to make money is to sell fast. The longer a house sits on the market, the bigger your holding fees. So it might be wise to take a few thousand dollars off the asking price. The sooner you can invest in the next property, the more successful you will be as a house flipper.