Shows on television have made more people than ever interested in buying homes to flip. Flipping homes involves buying homes that are inexpensively priced because they need renovation or repair. Repairs or renovations are then made, helping to add value to the home. The home is then sold. If a flip is done correctly, it can net the person who did the flip extra cash. However, if miscalculations are made, the flipper may find themselves selling the home for less than they bought it for and paid in renovations. Picking the right piece of real estate is key. If you are considering flipping a home, here are some key factors you will want to consider as you look to buy real estate.
You Are Investing No More Than 70 Percent of the After-Repair Value Into the Project
Money matters when it comes to flipping real estate. One of the most important factors to consider before you make an offer on any home has to do with money. Always find out how much the home will sell for when you are done renovating it and how much it should cost to renovate it. You should invest no more than 70 percent of the price you plan on selling the home for. If you invest more than this, you could lose money if an unexpected issue comes up or you have to sell the home for less than you expected. Keep this algorithm in mind when putting together an offer.
The Home is Structurally Sound
When you are looking to buy real estate to flip, you will want to have an inspection done on the home. If you are new to flipping homes, you want to stick to buying homes that are structurally sound. If an inspection shows there are major foundation problems, the house has rotting or shifting joists, or the load-bearing walls are shifting or have been illegally removed, you may want to avoid the home. Structural issues are costly and time consuming to repair. And unfortunately, until you start working, there is often no way to know the severity of the issue. Unless you are experienced in this field and willing to take a huge risk, you should avoid buying real estate that may involve a home that is not structurally sound.
The Home is in a Desirable Location
The last factor you want to consider when buying real estate to flip is what neighborhood the home is located in. While you may get great deals in bad neighborhoods, most experts recommend sticking to desirable neighborhoods when flipping a home. It can be harder to sell a home in a bad area, and you run the risk of over-improving the property. However, if you buy the worst home in a great neighborhood, you have a lot of room to improve the home while also having a buyer base when the home is completed. A real estate agent can tell you which neighborhoods are hot at any given time.
Flipping real estate can either make you money or cause you to lose money. Knowing what factors to keep in mind as you are buying real estate to flip will help you find the right home for your real estate flip.
Share22 February 2017
When I started looking for a new house a few years ago, I realized that I had no idea what I really wanted. I knew that I wanted a place that had been updated recently, but apart from that, I was completely in the dark. After evaluating my budget and considering my options, I decided that it would be a good idea to go around with my real estate agent to help me to find a place. My agent was incredibly helpful, and I was able to narrow down my choices within a few hours. This blog is all about making the ever-important decision of becoming a homeowner.
