Flipping houses is a trend that’s been on the rise for the past few years. It can be a great project and investment if you do it correctly! But, if you’ve never even had an investment property, it can be difficult to figure out where to start and how to tackle a fixer-upper and be successful in flipping it. That’s why Flash Realty Solutions has come up with a short how-to guide on how to flip houses. Continue reading to find out more about flipping houses 101.
How Does it Work?
In short, flipping houses usually means purchasing a fixer-upper or a property that needs some work, fixing it, and then selling it for profit. The most common places to find these fixer-upper properties are through foreclosures, short bank sales, or property auctions. In order to be successful at house flipping, you need to be willing and able to spend your money wisely on undervalued properties, which will often require a facelift. Then, you’ll invest in renovations that increase the property value and list the property on the market.
The 70% Rule
Real estate investors commonly talk about a 70% rule, and it’s wise to utilize it if you’re thinking about purchasing and flipping a property. The 70% rule is that you should pay more than 70% of the after-repair-value (AVR) of the property minus the repair costs. As someone who’s new to this whole flipping thing, you might be wondering what that means. Here’s an example: A house’s AVR is $200,000 and needs $25k in repairs. 70% of the AVR is $140k minus the repairs, equal to $115,000. In an ideal setting, you wouldn’t pay more than $115k for the property.
Know Your Skill Set
Certain skills will make you more successful at flipping a house than others. For example, having knowledge of construction and contracting interior design skills or knowledge of the real estate industry can propel you forward in house flipping. If you don’t have those skills, you need to know how to look for professionals who do. Knowing how to find those people is a skill in and of itself. You’ll need to assemble a team of experts to assist you in your flipping journey before it begins if you want to be successful.
If you haven’t saved up enough cash to pay for the project, that’s okay! You can get a pre-approved loan for it. You’ll need a good credit score to do so, and the bank might require some amount of a down payment as collateral.
These are not all of the step-by-step house flipping process, but they are some helpful pieces of information to get you started. To find out more about flipping houses and the other things you need to do in order to get this project rolling, contact Flash Realty Solutions in Houston, Texas! Our experts can help you plan, prepare, and execute everything necessary for your house flipping project.