Is house flipping for you?
House flipping is a lucrative, burgeoning business in the field of real estate, especially with the home improvement trends in social media. It’s very appealing especially because it promises high-value returns. Get ready to roll up your sleeves because it isn’t as artsy or luxurious as it sounds. Just like other businesses, prepare to put in hard work.
What’s house flipping?
Flipping a house usually happens when a real estate investor buys a house with the intention of minimally renovating it and reselling it quickly. The investor will buy a house to flip, make the needed repairs and some upgrades (in order to increase its value), style and design the house and then put the property for sale. Flipping property requires a hands-on strategy in real estate investing.
Real estate flipping may also refer to the purchasing and reselling of properties for a higher value. The investor buys a house at a lower cost then sells it as soon as the local market value increases. In Toronto, this is becoming a lucrative business, as home values continue to increase and the real estate market becomes hotter.
Considering that there are many elements and processes involved, you’ll need to understand the full picture of the process. If you’re up for it, this guide’s just for you!
6-step guide to house flipping
1. Get to know the real estate market
Take time to study your local real estate market, know your options and what you can eventually offer as a seller. Start by researching your location. Buying a home from a great neighbourhood means that you’ll attract buyers who are interested to live in that neighbourhood. How liveable is this neighbourhood? Get to know the profile of your potential buyers. What do you think their budget is?
When you’re done researching the market, come up with a plan that you’re willing to execute. If you’re flipping a house for the first time, consider making baby steps first. Start by making a facelift. Make a business plan as well. Write down how much you’re willing to invest and create a timeline.
2. Line up your finances
Real estate flipping is a different ball game from buying a home for yourself, especially when it comes to finances –mainly because you’re doing this for profit. Prepare your resources for buying the house, upgrading it and finally selling the property.
You can avail a short-term loan for house flipping, which can be a line of credit or a private loan to help cover your expenses. Experienced flippers want to broaden their options for home loan programs to make sure that they’re getting the best, most cost-efficient deals out there. Consult a trusted local mortgage broker to provide you with options and make your application process a breeze.
3. Find a good contractor
Now, it’s time to find a good contractor who’ll carry out the renovations needed prior to the house flip. Don’t underestimate the importance of having someone you’ll get along with and who trusts your vision for your house flip. Take time to build your network and interview a handful of contractors. You’ll be thankful you did it.
4. Get a house to flip
One of the most crucial parts of real estate flipping is finding good deals. A good deal must be something that’s below market value, could cover the costs of the renovations and would meet your target buyers.
While ways of finding a house to flip is a whole different topic, one of the key ways is to be patient and play the numbers game. Know your financial situation and get access to a wide scope of deals from the local housing market.
Time to get your hands dirty with house work! Make sure to practice efficiency and stick closely to your timeline. This is why having a good contractor is very critical. Every wasted time or day is lost money. As each month passes, you’re paying for interest, taxes, utilities and other costs involved in selling a house.
The most satisfying part of this process is selling the property. You have the upperhand to price the property for sale. However, you’ll need to understand the principles of real estate pricing. Better yet, get advice from real estate experts.
Lean on expert advice
Real estate flipping requires more expertise than buying a house, but there’s always an opportunity to learn, especially when you start working with experts. If you have doubts, ask away. If you have second thoughts, ask some more.
If you’re seriously considering house flipping as a business, lean on expert advice and discover your financial options before you proceed. With Daisy Raouph, you can efficiently plan your business and get a mortgage that’s perfect for your set up. Call today to book your consultation.