A “fixer upper” house doesn’t garner the highest price out of all the properties for sale in the neighborhood. So, the average buyer might not be too interested in owning the home. A leaky roof or the need for new plumbing means costly repairs. For someone capable of getting those repairs done right, a distressed property presents an opportunity. Repairing a house raises its value. Professional home flippers can make big money with this classic entrepreneurial strategy.
The math speaks for itself. A home is purchased for $65,000. $30,000 of repairs are performed. The property sells for $125,000. Even minus expenses such as insurance and taxes, a nice profit could be had. Quantify this by two homes and the money rolling in becomes impressive. All this can be done working from home as a full-time or a side job. Who said a side job can’t be potentially lucrative if done right?
Granted, the job of flipping homes is not necessarily easy. The flipper must put forth the necessary work and effort. Those up to the task might find themselves on the path to great wealth.
Flipping Starts with Freebies
Buy the actual property costs money. Paying for the renovations isn’t free, either. Inside a lot of acquired properties, there may be quite a number of belongings the previous owner choose not to take with him or her. People selling distressed properties cannot ask for top dollar on a home. Spending the extra money on a cleanout or moving fees cuts into the already low sale price.
For the new owner, selling the belongings becomes a means of making extra money. Furniture, tools, consumer electronics, and whatever else may be inside the property could bring in a few extra dollars. That money can go towards covering for materials and labor. New glass doors may be paid for by selling an old couch set and other freebies in the home.
Get the Renovations Done on Time
House flippers do need to hire the right people who are capable of performing the necessary renovations. The work must be done properly and within a reasonable time period. Flippers probably won’t benefit when the repair work drags on for months and months. Falling behind schedule leads to added costs and hassles. If the home won’t be finished until December, this won’t be an optimal situation. Buyers probably won’t be showing up in large numbers until the spring.
Price the Property Accordingly
Placing a property on the market at too high of a price means the property will likely end up sitting on the market. Buyers generally won’t overpay for a home. Flippers who have an idea in mind about all the money they can make selling homes benefit from connecting their ideas to the reality of the market. Pricing a home too high can possibly undermine things. Earning the money back on the initial investment won’t be possible when the home isn’t selling.
Pricing the home too low might not be helpful, either. A low price on the home may move it quickly, but the profit margin might be quite slim. For some, a slim profit margin is acceptable. Others may regret their decision when they realize they could have sold the property for a lot more. Probably the best strategy would be to price a house accordingly and make sure the amount is both reasonable and personally acceptable. The buyer and the seller both want to be happy with the deal.
Be Energy Efficient
A solar powered heating system is much less expensive than it was even 10 years ago and pays for itself quickly. New appliances are also amazingly energy efficient, so exchange that old, wheezing fridge for one that’s brand new. The energy and therefore money saved adds multiples to the value of a home and its property.
Research the Process Before Jumping In
Rushing into flipping homes without really researching or studying how it is done can lead to costly mistakes. Taking the necessary time to learn the basics about flipping properties would seem to be the prudent approach. Prudence often proves to be a very useful trait for an entrepreneur.