Recently, there has been a lot more property shows focused on flipping houses – the process of buying real estate to renovate and then sell on for a tidy profit – and this has sparked the idea in many people’s minds to do the same.
Although shows like Masters of Flip make the process of flipping houses look so simple and the returns seem to be astounding ins some cases, it really isn’t as easy as you might think to make a profit from this process. So, if you’re interested in flipping houses for a living, you’d do well to work out if it’s really for you.
Here are some signs that you might be ready for a new career as a house flipper:
You Know More About House Flipping than What You See on TV
If you plan to get into house flipping after doing little more than watching a few of the shows on HGTV, then it’s highly unlikely you’re ready for a career as a real estate renovator. As I mentioned earlier, these shows make the whole process of buying, renovating and selling real estate a lot easier than it really is. In their world, you can see a condo for sale one day, buy it the next and have it ready for sale within a few weeks. In the real world, it isn’t that simple, especially when you’re just starting out, and you need to source good contractors, learn how to manage projects and do a lot of hard work.
If you’re serious about being a house flipper in the future, and if you don’t want to be disappointed, or even worse end up losing money, you need to take the time to really learn about the process first.
You’ve Done the Studying
Like most things in life, you will have better results with house flipping if you know what you’re doing. Being educated is never a bad thing, and it will help you to get things right from the off. You’ll need to study everything from property prices to project management if you want to stand the best chance of making money from real estate and you will not want to start the process before you know everything there is to know.
You’ve Talked to Other House Flippers
Websites like biggerpockets.com allow you to connect with other real estate flippers, and doing so is a really good idea. It will help you to get a better picture of what is involved, any pitfalls you might face and how to go about starting your first project. If you make friends with local flippers, they will be able to support you with your first project, so that it is a successful flip rather than a total flop.
Your Finances are in Order
You really shouldn’t take on a house flipping project if your finances a are all up in the air. Investing in real estate represents a big commitment, and you need to be financially in a good place if you’re going to secure a mortgage.
You’ll also need to know exactly what your financial commitments will be before you buy, as well as having an idea of how much money any property you’re interested in is likely to need spent on it before it can be sold on for a profit.
If you are bad with finances, please don’t start playing around with real estate until you’ve educated yourself and you’re confident you know what you’re doing!
You Understand Your Funding Options
You should also take the time to work out your funding options before you start flipping houses. Although mortgage loans are still the most common way of obtaining real estate, they are not the only one available to you. There are lots of attractive loan offers which are made available to house flippers with no money down, but many of these are little more than scams, aimed at house flipping newbies who don’t really know what they are getting into, and which could put you under serious financial strain now and in the future. Looking at all of the options and checking out the integrity of financial backers before you sign anything is, therefore, a must.
You Have the Time
Those houses on Masters of Flip might be renovated in the blink of an eye, but that is unlikely to be the case for your projects. A lot of people have the idea that they’ll be able to renovate properties in their spare time, and although this is not impossible, it is unlikely unless you can afford to hire a large team of contractors. So, if you don’t have plenty of time to work on a house, perhaps do not jump in and start investing right now. Wait until you have a lot more time to dedicate to the project and things will work out a lot better for you.
You’ve Found a Good Team of Contractors
You should never start the house flipping process before you’ve found a good team of contractors who you can trust to get the work done on your property. If you haven’t already researched local contractors to see how affordable, efficient and professional they are, you simply aren’t ready for house flipping. By not doing your homework, you could leave yourself with a half finished house, a poorly renovated property or empty pockets if you make the wrong choice. In the house flipping business, you really do need to be confident that your contractors will do their best and won’t leave you in the lurch.
You Understand the Risk
Although there is no doubt that investing in real estate can be an extremely profitable and enjoyable way to make a living or save for your retirement, it is not easy, and there are lots of risks. You need to understand that there are many things which can, and quite often do go wrong. From undisclosed mold problems to faulty wiring, few homes are issue free, and you need to bear this in mind and plan accordingly if you want to be ready for a career in real estate flipping.
You’ve Researched Local Real Estate
You really shouldn’t plunge in and buy a property to renovate before you’ve thoroughly researched the market in your neighborhood. This is important because it will enable you to ask questions. For example, if a property in your area is selling for significantly lower than average, that’s a good indicator that there may be something really wrong with it, or if you know that a particular area is known for its crime, you’ll know that buying there might not get you the best return, even if you do a wonderful renovation job. Of course, knowing the market will also ensure you don’t pay too much for a property and then struggle to make any profit once you’ve renovated, too.
Your Expectations are Realistic
If you don’t want to be disappointed, then you need to do all of the above, and you need to set your expectations at a realistic level. If you have your head in the clouds, you might end up spending too much because you think you can get more from a property than you really can, or you might put all of your eggs in the real estate basket, when really you probably shouldn’t.
The harsh truth is that real estate flipping isn’t for the delicate. You have to be willing to put your money on the line and invest lots of your time and energy to the project if you want to be successful.
Image credits to Gili Chupak – https://flic.kr/p/7AAH4x