3 Ways To Flip A House

Placing an offer: Since verbal offers don’t constitute a legally enforceable sale, you need to draft a written offer and give it to the owners and/or Realtor. The offer stipulates price as well as the terms and conditions of the sale. If the offer is accepted, the offer becomes a legally-binding sales contract. Getting a mortgage: Unless you have heaps of cash handy, you’ll need a mortgage. There are dozens of kinds of loans out there, so examine the ones that might work for you and talk to a mortgage broker if you have any questions. Some mortgages (ARMs) have special “teaser” interest rates that stay low in the beginning and increase significantly after a certain period of time. These might be attractive if you plan on selling the home quickly. Removing the conditions: This is usually what the buyer does once the seller has accepted their offer. It is a legal move that the buyer (usually) makes in order to communicate that any obligations entered into by both or either parties have been met.

The amount of physical effort required is also a potential risk. How fit are you and how willing are you to do a lot of the DIY work involved in flipping the house? If you’ve never done renovations or fixes before, it will be a steep learning curve and the less you know, the longer it’ll take to flip the house.

The housing market is like the stock market. It has both bull cycles (meaning optimism, growth, and high demand) and bear cycles (meaning pessimism, contraction, and low demand). The difference is that the housing market can take many more years than the stock market to switch from one cycle to another. After talking to at least three Realtors and doing some investigation, if you find that the market is in low demand and everyone and their dog seems to be trying to liquidate homes, housing prices are going to fall and profit margins will fall with them. These kinds of market conditions would make it more challenging to flip a home. Try to wait for a bull market. Wait to buy until the real estate market has turned back around and more people are trying to buy than sell. This will create better conditions for you to start flipping.

A home with room for improvement might have a run-down yard, an old carpet, a good spot for a carport, or other things that can be fixed with a little money and some hard labor. These types of fixes often provide an excellent return on investment (ROI) when flipping a home. Some people look for distressed properties. Those are ones that the seller is “desperate to sell” for reasons such as: divorce, bankruptcy, death, poor condition of the property, late on payments or other. These give the buyer an inherent advantage over the seller. Look for homes that sell in the middle to upper range. What that means is the amount where the average family would be able to afford it. Generally that means between about $200,000, and $500,000 depending on your area. You want that price range because these tend to sell the fastest — you have the largest population density looking for these mid-range homes. It could be much less or much more but that’s about the average. These homes generally have 3 or more bedrooms and at least 2 full bathrooms. Find out what is preferred by residents in the area you’re looking to buy into. Simple things like easy access, off-street parking, no-through roads and a quiet neighborhood can make or break the attractiveness of a property.

Keep in mind that there are 2 different financing dates: 1 for making an application to get the loan and 1 to gain the funds to close the deal. To protect the buyer, the contingency should extend through the close of the contract. Generally, a financing contingency has a deadline of 30 days, so extend the deadline unless you know you can get the financing within that time period.

Note when you expect major renovations to be completed by. Include regular progress reviews to help you stay alert to problems as they arise. Mark down blocks of time when you’re available to work on the house, such as long weekends, vacation time, etc. that you expect to accelerate the work being done.

Major fixes are things like rewiring the house so that it doesn’t fault and cause a fire or electrocution; fixing broken fixtures such as bathtubs, showers and sinks; re-flooring tired carpets or bumpy linoleum; patching up wall/ceiling/door holes; replacing hinges/brackets/fittings, etc. that are loose or broken; repainting peeling or poorly done paintwork; replacing broken tiles/pavers/steps, etc. ; renovating anything that is dirty and broken––tired things are less of a concern than dirty things, so prioritize what needs doing most. Seek out the cheapest labor you can find (college kids, or even yourself) and have the property immaculately cleaned up and repaired. If there’s any money left over after this, put it into a high-interest liquid savings account; do not use it to pay off part of the loan yet. Remodeling kitchens and bathrooms typically do not raise the value of the home enough because owners tend to pay too much for the remodel.

Read books written about what buyers look for in a home. A lot is about presentation––if you can use a few shortcut tricks to enhance the house’s look, then you’ll save time and money. Of course, you also need to pass the builder’s inspection, so this needs to be taken into account for any structural issues that need addressing. Typically, cleaning, painting, and adding plants are the cheapest way to boost the value of a home. A deck also raises the value more than the price of the deck. Replacing electrical and plumbing fixtures and fixing anything broken is also a cheap way to get a good boost in home value. Things you can probably do yourself: Repaint. Tear out old carpet to find hard wood floors or re-carpet. Touch up old fixtures. Paint minor areas. Change fittings. Repave patio and entrance areas. Change the color of the front door. Add new handles.

Use the power of the web and your personal network if you’re having trouble selling the home. Don’t just rely on the broker to make the sale. Put ads up on websites (Craigslist, Zillow, or Trulia are a good starting point) and tap into your social networks to see if anyone might be interested in biting.

Be willing to lower the price if no one is biting. Researching home prices in the area is a must, especially if the price of your home is bloated and you don’t even know it. Adjusting the price to a more manageable sum can mean a sale in no time. Paying a mortgage and taxes on an overpriced home because your ego is in the way of lowering the price is not a good way to make money.