4 Tips on How to Flip an Old House that Needs Work

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Flipping houses is not easy. In fact, it is both challenging and risky.

You will spend tons of money on a particular house while not being sure if you can even sell it for a price that will be satisfactory.

If only it is easy, right? If it is easy, everyone would be doing it.

But it’s not. Before going ahead and flip houses, you must first educate yourself and learn all the know-how of the trade.

See if you can take the expenses and greet the market head-on.

But first things first, what is flipping?

What is Flipping?

House flipping is finding and buying a house, usually done at auctions, and renovating it from top to bottom depending on the state of the house.

After the renovations, it is sold to potential buyers. You can make a significant amount of money by flipping houses- if you’re lucky.

However, you can also lose tons of money if it’s not done right, or you’re just that unfortunate.

Don’t let that get you down, though, because the money you earn can be a lot.

Of course, the potential of selling the house you flipped depends on how knowledgeable you are in the business, with a little sprinkle of luck.

That said, here are some tips you should take note on how to sell a home that needs major repairs.

1. Consider Your Finances

Before you can flip a house, you need money to buy one. Moreover, renovating a house from top to bottom can be very expensive. Thus, you should have a significant amount of money for capital.

If you can find a loan with an interest-only policy from the get-go, consider yourself lucky. These loans typically allow you to refinance the loan once the work is complete.

However, the loan can have additional closing costs, so be prepared for that.

These kinds of loans are rare. Loans that cover the costs for repairs and the purchasing of the house is hard to find.

You might want to save up even just a little bit of money to tank the cost yourself in case you can’t find a loan.

2. Know the Market You are In

Flipping houses can be exciting for most people. However, their excitement overshadows the less glamorous side of the flipping industry, which is the market.

If you don’t understand your market thoroughly, you can run into many issues down the road.

One of the worst cases you can be in is not knowing how much the house you will be buying is worth.

You should always take a look at the sale price and see if it is within your budget. Make sure that you still have enough money for renovations once you buy the house.

Additionally, not knowing the price of your finished project can be a bad situation.

For example, you’ve bought a house within a specific price range, and your renovations seem to cost a lot more than that, you might want to shave off the price artificially for potential buyers.

However, these nasty situations can be avoided with the help of a real estate agent. Find a real estate agent that is knowledgeable about the area and its real estate trend.

They will be able to help you price your house and find potential buyers.

3. Budget and Business Plan

Just like other entrepreneurs in other industries, real estate investors also need a business plan.

You can make it simple, such as including the budget intended, a timeline, and the business scope.

The business plan should answer most of the questions like how much money should be spent on something, how much money you should put in the reserve, or when the project ends.

4. Learn How to Price Everything

Every project is different as you are dealing with different houses with different problems.

However, over time, you will learn how to estimate these problems and incorporate them into your budget.

That said, the experience is key to budgeting, and learning it will make you make the most out of the house you bought and the money you spent on it.

One of the best ways to learn how to estimate projects is to do renovations in your house. This will give you a general idea on how much a particular repair costs and how long it will take.

It would also be best if you learned which repairs and renovations can increase the house’s value. This way, you can increase the overall price and gain more money.

However, just like mentioned earlier, never over price. Overpricing will decrease the number of your potential buyers and also the chances of your house getting sold.

Takeaway

Flipping houses is challenging but very rewarding.

In short, it is a high-risk, high reward venture, and if you don’t spend time and effort in researching and getting to know your market, you will surely have a hard time.

Researching can also be difficult, especially for someone who isn’t part of the industry.

Hence, if you aren’t that good at researching, you can hire a real estate agent’s help.

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