How Does House-Flipping Work?

Those interested in the real estate business have surely contemplated flipping home for profit. Some of the nation’s highest net worth investors rely on real estate holdings to underpin their portfolio growth over the long term and recommend this asset class to anyone looking to expand their wealth-generating potential. However, the market trend for home buying is skewing older, with the average first time home buyer now clocking in at 33. This discrepancy in the market means that typical buyers trend in divergent paths. The market is saturated with buyers looking for a first home that fits a basic set of requirements and offers great potential for future renovations. Other, older buyers are seeking that perfect turnkey space after owning multiple homes and trading up throughout the years. The tendency of homeowners to conduct their own renovations means that flipping homes offer great potential returns with minimal input.

But many buyers looking to become home flippers often don’t know where to begin when approaching a house-flipping project. The truth is, there are a lot of potential pitfalls in the business of fixing up and flipping homes. But with the right approach and an open mind, you can avoid these issues and shorten the learning curve in the industry in order to skip ahead to the part where you begin to make a profit on your buys and enjoy the rewards of your hard work.

Flipping begins with research.

A great home flipping strategy begins with research, just like any other investment opportunity. In order to capitalize on the marketplace in your local area, you need to understand the average value of homes and price per square footage standards in the market you are buying within. Real estate investors begin here because it gives them a great understanding of purchases that come in under budget or give a great potential return on investment. Foreclosures often offer a discount from the typical market price, but there are many other types of homes for sale that can net you a great return. With years of experience, you will learn to identify these diamonds in the rough properties without a long period of research beforehand. But to begin, you need to learn the fundamentals of an investment property spot.

House flippers need to secure the funding.

Home buying, specifical purchases for the purpose of investment follows a unique set of regulations. Hard money lenders are often eager to fund your purchases in the world of real estate—whereas buying other investment assets like precious metals or stocks must be done on your own dime. With the addition of funding options, real estate investments are actually very affordable for many investors. Fix and flip loans Oregon are available to a wide variety of borrowers and house flippers and the standard hard money loan that is utilized in the business of real estate flippers are typically not ones that accrues much interest.

A successful purchase for the purpose of flipping a home requires a basement buy-in price. These homes often require extensive work in order to bring them up to scratch, but much of the upgrading can be done without professional help, saving you money. However, you will want to enlist a team of contractors that you trust with years of experience behind them for jobs like custom bath remodeling or kitchen counter installation. Utilizing professionals for the larger jobs, like replacing bathroom cabinets or bathroom vanities, gives you access to unparalleled craftsmanship and installation know-how that you simply don’t possess. And working with the same contractor team for each job will build a connection with another business that can give you discounted rates and a level of trust that you just won’t find by jumping from firm to firm.

Real estate investors looking for flip opportunities want to get them back on the market as quickly as possible. This means tackling the big jobs right away and leaving some of the minor work as finishing touches or listing the property with some bare-bones exposed. Many future homeowners will appreciate the ability to put their own flair on the space and seek out homes with certain ‘unfinished’ qualities about them. In this case, customer satisfaction will actually save you time and money.

Know your market and secure favorable funding in order to quickly turn a home around and get it sold so that you can bank the profit and move on to the next property to upgrade.

Written By
Elena Hicks
Investment Advisor | Contributing Writer
Elena Hicks

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