Flipping Houses: Getting the Biggest Return Without Breaking the Bank
Investing is real estate is and has pretty much always been one of the best ways to get a solid return on your money while still buying a tangible asset. It’s true that the market has changed in recent years, but with the current rise in home prices and the relatively low number of for sale listings coming into the market, flipping houses has become both competitive and also highly profitable in the new market. If you are new to this investment strategy, it can be easy to get lost in the details. The key to getting the most out of your money is simple though: planning.
Start by looking at your available resources. Price out the costs of any short-term loans you might need to cover the purchase, as well as the materials and labor costs (if any) you expect to encounter. Obviously, without a particular property in mind these are generalities, but you will have a hard time understanding what your price limits are when flipping houses if you don’t go in with some budget limitations to help you see where your costs and profits will be. That way, you know going in what your absolute top number for the house itself will be.
The next step is to check out your market. It’s important to know what kind of neighborhood you are getting into, what the median house resale value is, who the neighbors are in terms of social demographics, cultural interests, and especially architectural tastes. That way, your eventual remodel will have a unique look that still fits in well with the neighborhood, and you will also get a better idea about what a realistic asking price looks like in the area where you will be flipping houses.
If you are renovating with a particular buyer in mind, then the next step is to educate the buyer about the property. As you do your work, make a list of each system or feature that gets upgraded, so you can fill out your real estate listing with details about both the original features you preserved and the upgrades you made. Showing your audience for the house the exact changes you made and explaining their appeal not only helps them to imagine the house before seeing it, but to understand their reasons for fitting in well with this particular house.
Last but not least, set a realistic asking price for your neighborhood. The reason this process starts with and builds from data-driven research is so that you know you can afford to sell the house going in. Controlling your budget and meeting that goal is the key to successfully flipping houses. It’s just a matter of understanding and staying within limits.