House flipping has been one of the most profitable projects that investors can do for decades. And the number of investors who flip houses and flipped houses are increasing every year. House prices are up, and people don’t want to wait anymore, risking getting into the game too late.
But that doesn’t mean you should rush it. Flipping houses has its own risks, and diving into the business without doing your research is a bad idea. At the very least, you need to know all the challenges that you need to overcome if you want to be a successful house flipper.
1. Learning the market trends
The House market never stagnates. It is always moving up or down, and sometimes can be volatile. Be responsible and follow national sources and your local real estate agent regularly. Once a month is the least you can do to keep yourself updated.
Other than that, you can browse for house sale ads and look at houses that are sold recently. Get a good idea of what people are looking for: the design, location, price range, etc.
2. interest rates
Always monitor the interest rates. See how it will affect your assets, and whether you can make a profit or not if you decide to sell the house now or later. Interest rates are your nemesis. Some house flippers have experienced not being able to sell their houses because the interest rates were too high. So, know your buyers, learn the interest rates, and sell your property at the right time.
3. Finding the right property
There are some important questions that determine whether the property is right for you or not. Some basic ones are is it desirable, is the location in-demand? How is the neighborhood? Is it near a school or hospital? And are the values rising?
If the answers tell you that the property is great, then you should go for it. Otherwise, it’ll be difficult to make a profit. Remember that you need to factor in repairs and renovations too. If the property is not in demand, it could take you a while to sell it. And the maintenance costs could decrease your profit by a lot.
4. Making the right offer
This is a tough one, and you definitely can’t go in blind. To make a profit from flipping a house, you need to buy it at below-market value and sell it at a higher price. So how do you do that? There are some things you can do, first, is by talking to a local real estate agent. Be open and share your plans, then you can ask for an accurate market analysis.
Then, you can ask a broker for their opinion. You can get an official report that can give you an estimated value of the house’s selling price. If you want to go all-in, you can try to get an appraisal. A home appraiser will come to the house, take a look around, and give you an accurate potential selling price.
5. Choosing the best time of the year
Selling a house is a seasonal thing. There is a pattern that you need to learn. Usually, late January to February is the worst time to sell a house. Meanwhile, July is when the market gets busy. To maximize your profit then, you need to precisely time your project. Don’t miss the window, and you will get the profit that you’re looking for.
Flipping a house is not an easy thing to do. There are so many things to think about. And if you’re not good at management and multitasking, you’ll be overwhelmed.
Remember that you’ll need to hire contractors, buy materials, monitor the projects, list or market the property, and negotiate many deals. It’s obviously a lot of work and can be tedious most of the time. The more houses you’re trying to flip, the bigger your workload is. And don’t forget that, each you make a mistake, it could cost you.
Flipping a house isn’t as easy as it sounds. Not many people can handle it. If you’re serious about being an investor, you must ready your heart and do your due diligence. IF you can manage to do everything, you can maximize your profit without fail.