House-flipping is a popular activity these days on cable home shows, but how does someone with little real estate experience find out if it’s right for them? There are actually lots of resources available for homebuyers these days that make the process a little easier, and once you’re armed with some knowledge about which projects pay off the most and what to avoid, flipping a home can be quite profitable.
For older adults, it’s a way to boost post-retirement income by doing something they enjoy, which makes it a win-win. Here are a few things you’ll need to consider early on in the process, courtesy of Smart Strategies for Successful Living.
Legitimize your business from the get-go
It can be difficult for homebuyers to put their trust in a stranger, especially when so much money is on the line. One way to ease their minds is to assure them that you’re a legitimate business person who will ensure that the home is renovated properly, and you can do that by forming a limited liability company (LLC). This type of structure also provides tax benefits and is easier than ever to form with an online formation service that will handle the paperwork for you.
Your budget can make or break the project
After forming your structure, The Nest points out that it’s crucial to start with the right budget and make some careful projections regarding how much you can afford to pay for the house. Many home-flippers go by a general rule to determine the ideal price: 70% of the final value of the home after repairs, minus the cost of those repairs.
Once you have an inspection done, there may be new fixes added to the list that you hadn’t planned for, so you’ll also need to have a cushion in your budget for those unexpected issues. The easiest way to get started is to apply for a mortgage pre-approval so you’ll have a number in black-and-white. This will also show the sellers that you’re serious about buying and could give you a leg up on any competition, which is beneficial in such a hot market.
Know what buyers are looking for
Once you have a budget worked out, it’s time to think about which renovations you’ll tackle. It’s essential to keep in mind that these projects aren’t always about what you want; you’ll also need to consider what buyers are looking for, which renovations will bring you the most return on your investment, and which popular amenities make the most sense for the home.
A good place to get a better idea of what certain projects will cost is communicating with your contractors. Most home improvement contractors employ home builder software that assists them with streamlining project estimating, creating change orders, invoicing, and so much more. Make it a point to first line out what needs to be done, then set up a time when you can expect to hear back on their estimate, which this type of software fine tunes down to the smallest detail, including time frames.
Homes & Gardens notes that things like bathroom updates and kitchen remodels are two of the most popular projects for home flips, but they can also be some of the most involved due to things like plumbing and flooring. Plumbing services can cost anywhere from $45-$150 an hour, so it’s important to make sure you’re working with the right contractor. Make sure they’re licensed and insured and read customer reviews of their work online before hiring.
It may also go without saying, but every buyer expects a clean home. So make it a point to prioritize deep cleaning and decluttering the living areas, especially after projects are completed. To get a better handle on this subject, go online to read up on in-depth product reviews to expert cleaning advice from experienced cleaning experts.
Market yourself via social media
You’ve found the perfect house, you’ve done the renovations, and you’re ready to sell. How will you find the perfect buyer? It’s important to learn how to market your services and show everyone all your hard work, and an easy way to do this is to create a brand. The right branding will allow you to market your business and provide something memorable, such as a great logo that separates you from your competition. You don’t have to spend a ton of money on digital marketing services, either. Focus on advertising via social media to reach a huge audience of potential customers without spending a fortune.
Learning to flip houses takes a little time, so do some research before jumping in and make sure you’re familiar with local real estate laws as well as requirements for permits and licenses. Armed with the right info – including legitimizing your venture, budgeting, anticipating buyers’ wants and needs, and marketing yourself – you can turn house-flipping into a lucrative business.
Written by: Susan Good
Susan Good recently retired from teaching after 38 years. And although she misses engaging with students, especially the satisfaction they feel when a concept finally clicks, she gets fulfillment these days from continuing to teach through her website at http://retirededucator.org. At Retired Educator, she shares lessons and resources on reading and writing for students, young and old.