How good is your knowledge of Property Management in Worcester County?
For years, the real estate market has been one of the most popular places for individuals and companies alike to invest their capital. Indeed, if you know what you are doing, investing in real estate can offer some fantastic returns. However, it is not always easy to know what the right moves are. This is especially true if you are trying to flip a weathered and dated old house into a profitable, modern home. With so many choices to make and potential pitfalls to avoid, it can be tricky to know how to proceed at times. Luckily, there are a few key pointers that you can follow in order to maximize your chances of success.
HGTV stars Terek and Christina make the Flip process seem easy and lucrative.
Understand Your Local Market
The first step to financial success in flipping houses is understanding your local market. Understand the types of houses that are popular in each neighborhood and learn about their typical selling prices. Trying to sell a $300,000 flip in a neighborhood where the average home sells for just $125,000 is a great way to lose money fast.
Meticulously Plan Your Financing
Create a plan for how you will access and use your financing. There are a number of financial vehicles and programs out there that offer very low interest rates on home purchases and renovation projects. By planning everything in advance, you will be able to avoid putting an unexpectedly large sum of money on your credit card, which likely has a much, much higher interest rate. Managing your interest charges can potentially save you hundreds or even thousands of dollars across the life of a project. A financing option to consider is a Hard Money Loan. Though this loan carries higher rates, it is backed by the value of the property and not the credit worthiness of the borrower. Traditional lenders, such as banks do not make hard loans. Lenders are often private individuals that see value in this type of potentially risky venture.
Learn How To Estimate
Understanding the art of estimating goes hand in hand with planning your financing. Before you ever close on a house that you want to flip, you should already have an accurate estimate for how much it will cost to renovate it. If you purchase a home for $100,000 and believe that it can sell for $175,000 when it has been renovated, you need to be sure that you can fully renovate it for less than (for example) $30,000 if you want to turn a decent profit. If your estimates say that the renovation will actually cost closer to $80,000, then it is probably a good idea to walk away.
Flipping a house successfully is all about managing your margins. One of the best ways to increase your margins is by negotiating. Don’t just negotiate on the initial purchase price of the house. You can also negotiate the cost of tiles for the bathrooms, insulation for the walls, and appliances for the kitchen. Getting the best deal on all aspects of the flip is a great way to maximize your profits.
There is no guaranteed pathway to success in house flipping. There will always be some element of luck or random chance for every project. However, by following the tips contained in this article, you will be giving yourself the best possible chance for success in the real estate market.