Retirement doesn’t have to mean long days of doing nothing. Besides, these days, who really has the money to retire comfortably anyway?
If you fancy yourself a DIYer, in terms of home improvements, you may want to consider flipping homes as a means to generate an income while keeping busy with something you’re passionate about. If you want to know what it takes to get into the house flipping business, the Castle Brokerage offers these essential tips to follow.
Know What a “Flippable House” Looks Like
Not every house can be flipped for a profit. That’s why it’s critical to know what to look for in a potential house flipping project and when. The when depends on the state of the market according to Real Estate Express, while the what depends on the location and condition of the house in question.
The ideal house for this type of project is a house that needs minimal work and is in a prime location. You’ll want to avoid houses that have a weak foundation or plumbing issues. These will only cost you more time and money between the cost to fix it and the monthly mortgage and interest costs. In terms of location, you want a house in an up-and-coming neighborhood where all the young families and professionals are moving too. Think: low crime rates, close to good schools, and within walking distance of public transportation, shops, etc.
Put Together the Right Team
Unless you’re an experienced contractor that built or fixed houses your whole life, this isn’t a project you can undertake alone. You’re going to need to put together a crew of professionals that have a good reputation and can offer you the best rates possible. You’ll likely need a contractor to confer with, painters, landscapers, and other specialists such as a home inspector. Once you find the right people, you’ll want to use them for your other projects, as well — this way you can expect consistency in the quality of the work to ensure the best possible outcome.
Make Sure You Have Enough Investment Capital
If house flipping was cheap, everybody would do it. Homelight notes that the average cost to flip a house is estimated at 10% of the purchase price. That means you’ll need to calculate the purchase price — plus 10%.
It’s also best to make the initial house purchase in cash so you can avoid mortgage loan fees, interest, PMI, etc. If you can’t make the purchase in cash, you better have excellent credit so that you are able to get a mortgage loan with the lowest interest rate possible.
In the eyes of lenders and customers, operating as a limited liability company (LLC) adds credibility, so look into forming your entity and registering with the state. To further your legitimacy in the eyes of lenders and contractors when establishing your business, consider creating a custom logo. A free logo design maker offers a simple solution for this, and templates and design tools make this a quick task.
Additionally, you’ll need to manage all of your expenses. To do this, you’ll need accounting software that flexes with you. For example, QuickBooks Online can help you create a budget, monitor your expenses, automate payroll tasks (which you’ll need for the contractors you hire), and more. To further fuel the growth of your flipping business, you can also rely on in-depth training to make the most out of the platform, as well as comprehensive support.
It’s never too late to take on new projects, especially ones that can turn a worn-out old home into someone else’s dream house. All you need is market and home improvement knowledge, the right team, and enough money to purchase that first fixer-upper. Once you start flipping houses and turn a profit, you’ll likely want to keep going — and you’ll build a reputation for yourself in the process.
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You need a real estate pro who knows the Bay Area inside and out! Castle Brokerage can work with you to find the right home at the right price for you. Contact us today! 408-409-3333