While house flipping can be very lucrative, you can lose everything with one bad decision. It’s important to approach this profession with caution and educate yourself as much as possible.
Before you even dream of entering this field, you have to be great with your hands or at the very least well versed on the topic of trades and renovations. You should also have a feel for the market. The last thing you want is all your profits sunk because you bought at the wrong time. It’s not as fun and easy as it looks on TV. This is a job that is not only very stressful but requires a lot of hard work.
It goes without saying that you need investment capital and excellent credit before embarking on a project of this magnitude. This step-by-step guide will set you in the right direction, but it’s important to remember that this isn’t an exact science. Never be complacent and always stay on your toes.
1. Scouting Homes
The most typical way to find homes is through the regular channels, finding a real estate agent, searching online, etc. However it’s important to be patient, always look out for the right deal.
The best bang for your buck is foreclosed homes. Make a habit of routinely checking the Internet for new foreclosed homes. Once you find one that looks good, never buy it on a whim. Always see it in person and bring an inspector.
The real estate market is generally steady, but there can be significant fluctuations from time to time. The last thing you want is to be a victim of these fluctuations. The most important thing to take into consideration when scouting a new home is locations. The better the location, the easier to flip. Selling fast mitigates the risk of these fluctuations. It’s also important to have great relationships with contractors so you don’t get caught with them dragging their feet.
3. What to look for in a house
It’s important not to purchase a potential tear down. What you’re looking for is a home that is structurally sound and only requires cosmetic upgrades. That’s why it’s important to have an inspector to verify that there is no mold or asbestos and that the wiring is sound. You also have to ensure that it’s built on a solid foundation.
4. Which renovations to focus on
As mentioned in step 3 you want a house that only requires cosmetic renovations, structural ones are very pricey. Even when narrowing it down to cosmetic, make sure you are focussing on cosmetics that will actually increase the value of the house. For example, installing a swimming pool is very costly and while it attracts more buyers, it won’t make you any extra money.
The most important room to focus on is upgrading the kitchen. Fresh tiles, a new backsplash, and marble or granite counter tops are essential. It’s also vital that you upgrade the appliances to stainless steel.
Other essential renovations include upgrading the bathrooms, installing fresh hardwood floors and fresh paint of course. Be sure not to neglect painting and landscaping the outside of the house to increase curb appeal.
Once you’ve located a sound house in a good location and finished all the renovations, flipping it should be a cinch. Also, it’s a good idea to be proactive and look for buyers before the project is complete.
Buying a home is probably one of the biggest purchases you’ll ever make in your life, which is why it’s so important that necessary repairs are made to ensure your safety, financial stability, and overall happiness. However, where do you draw the line when requesting repairs from sellers as to not jeopardize the sale of the property all together?
Cosmetic repairs are arguably at the top of the list of what to never ask sellers when interested in a home. Sure, the tile in the kitchen may look worn out and the backyard’s grass may be almost completely dried out; but you should avoid asking sellers to fix them. These repairs are completely cosmetic– meaning they don’t pose a threat to your safety or day to day well-being; therefore, they’re not worth risking the sale. The bright side? You can pick contractors and repairmen that you trust and can be sure the job gets done exactly the way you want it.
Inexpensive fix-its (under $100).
Fixing things like faulty faucets or jammed windows are considered inexpensive and somewhat petty. Many real estate agents encourage buyers to eat the costs of minor repairs as to not become annoying to the seller. If sellers become too agitated with buyers, they may decide the deal isn’t worth it and will move on. If you find a home you can’t live without, don’t ruin your chances with petty repair requests.
Minor water damage.
It’s not uncommon to find water stains along sinks or along bathroom walls– leaks happen. For little water stains that pose no real threat, they’re not worth complaining about to sellers. However, if there is an underlying problem, like a severe leak or mold, your inspector should let you know so you can negotiate with the buyers and handle it appropriately.
Basic electrical issues.
Requesting things like light switch replacements aren’t really worth the risk of losing the sale– they’re fairly easy to fix and don’t cost too much. If you already have a long list of things that need repairing, this definitely doesn’t need to be one of them. But, if your home inspector sees something major you’ll have to bring them up with the seller or walk away.
Looking for someone to help you navigate the home buying process? Contact Norma Langston Home Team, we will walk you through the process and get you to the closing table successfully.
Home Staging is a method of decorating that is designed to showcase a home’s best features by making the space appealing to a broad range of potential buyers’ tastes. First impressions are a key factor in selling a home– most buyers make up their minds within just ten seconds of entering the property. Contrary to common belief, home staging is more than just preparing your house for a sale; staging is what you do after you’ve cleaned, painted and decluttered. When preparing to sell your home, it’s important to convince potential buyers that your house is perfect for them, and that it will fit all of their needs.
IS HOME STAGING NECESSARY?
According to a 2015 study done by the National Association of Realtors, 81% of prospective buyers said staging their home helps them visualize the property as their future home, while 46% said it makes them more willing to walk through a home after seeing its pictures online. While it’s easy to assume home staging costs a fortune, the average cost to stage a home is actually just $675. Some home stagers will even drop the price if your own furniture is used as opposed to pieces they’d provide.
WHAT TO EXPECT.
Once you’ve put your home on the market, it’s time to decide if you want to invest in a professional home stager or just do it yourself. Before making the decision, you need to ask yourself if you’re prepared to take on the task of home staging. Although you may have an eye for decorating, when confronted with the grueling tasks of painting, hiring workers, and searching for the perfect accessories to make your home feel complete; the time you spend on these tasks can be exhausting. When you hire a home stager, you relieve that extra stress and can use your time focusing on the many other important aspects of home selling. Investing in a professional home stager could even increase your home’s value from one to five percent.
If you don’t decide to hire a professional home stager, be prepared to take on the following tasks:
- Remove clutter
- Add clean, attractive furniture (minimal furniture is always best)
- Paint walls with neutral colors
- Depersonalize (take down any family photos and loud artwork)
- Tend to front and back yards
- Clean floors and carpet
When selling your home, there are many factors that contribute to your home’s worth. Whether or not you decide to stage your home yourself or hire a professional, these improvements can make a big difference in your home’s selling price. Showcasing your home’s best attributes is an excellent way to attract and secure buyers, and it’s sure to increase your home’s market value.
Would you stage your home yourself or hire a professional? If you’re looking to sell your home, contact Norma, she and her team will help you get a plan together for staging and preparing your home to sell to achieve the best results possible.
BUILDING WEALTH IN REAL ESTATE
More millionaires are made through real estate than in any other industry!
Did you know…
- 60% of homeowner’s wealth is from the equity they have built in their home.
- The average homeowner’s net worth is 46 times the net worth of the average renter.
- During the last three decades, home values have increased an average of more than 6.0% per year.
- There have been more millionaires made through real estate than through any other wealth building medium anywhere in the world!
A wealth of housing data clearly demonstrates that housing is a good long-term investment. According to a study by the U.S. Department of Housing and Urban Development, 60 percent of a homeowner’s wealth is from the equity they have built in their home. A Federal Reserve study has shown that the average homeowner’s net worth is 46+ times the net worth of the average renter.
You might be wondering if buying a home right now is a smart financial decision. The fact is, homeownership is key to building long-term wealth, no matter when someone buys. Studies show that, over time, most homeowners will steadily build equity. For example, during the past three decades, home values have increased an average of more than 6.0% per year*.
TIPS ON BUILDING WEALTH IN REAL ESTATE
Can the average person really build wealth with real estate?
- Utilize a long-term growth strategy
- Buy then sell to make a quick profit
- Hold properties over a long period of time
- Never run out of money! Spend less and save more
There have been more millionaires made through real estate than through any other wealth building medium anywhere in the world. It is based on one simple premise. That premise is the cost of land which appreciates through time. You cannot build more of it because there is a finite amount of it. As the demand for the land increases, so does it’s value. The world population is growing by leaps and bounds and people need places to live. As cities grow, land gets developed; the infrastructure built around it raises the value of the land a great deal because of its increased utility. The location of plot of land and the building situated on it also increase in value due to the demand.
Can an average person do this? The answer is yes. What do you have to do?
- You must work to have an income
- You must keep that income
- You must put savings program on cruise control, in other words, make your money, make money
Some choose to utilize a long term growth strategy by buying single family and multi-unit properties, renting them out and letting them appreciate thru time.
Others prefer to buy and sell to make a quick profit and then repeat the process over again. This strategy works on the basis of finding properties below their market value and selling them at market value for a profit. A variation of this is to buy properties and make improvements on the building or land and then sell at a higher value. Or you can hold properties over a long period of time and watch your investment grow!
If you’re one of the millions of people who will list their home for sale this year, it has been shown that when it comes to selling a home, you’re better off using a real estate professional. Someone who can get the job done in half the time and can sell it for more than if you sold it on your own. That’s because a professional Realtor like Norma Langston is an expert in her field – Norma has extensive experience staging the home, marketing it, showing it and attracting qualified buyers to view it. She can explain options in your area that best fit your situation. Every market is different, contact Norma before you embark on buying or selling real estate.
*NAR existing home sales historic series.