Once you have acquired a property, the next step is figuring out how to add value to it with a view of making the most money in order to achieve a financial net return. This is where the term flipping comes in.
So, what does flipping a house mean anyway?
In simple terms, flipping a house basically means investing in buying a house with the sole purpose of selling it quickly and making a profit. Usually, this is not a long term play, it is more of a short term investment play.
We look at 3 key flipping tips below.
Ensure you buy the property at the right price
The whole point about making an investment in real estate is to make profit when you finally sell. Flipping property applies the same principle. The idea is to buy the property way below market rate so that by the time you are done working on the improvements, you don’t spend too much of your money that takes the cost of the house beyond market rate. The less you spend on purchase and renovations, the more your profit margin. You need to do proper research to ensure you have all the financials well calculated before purchase. Only do it when the finance bit makes sense.
Be sure to get out quick
House flipping is a short term play that aims at making the most profit in the shortest time possible. The longer you hold on to the property, the higher your chances of losing your investment. Seasoned real estate investors know that the property market at times can get very volatile. Property can dramatically lose value for one factor or another, you just never know when. So it is a good idea not to be too greedy. Once the value of the property gets to a number you are comfortable with, you better sell. Don’t seat around waiting for it to go higher so that you can make more. Things might actually take a turn.
Pick a team to work with wisely
Often, a property flip is not something you will do on your own. You will need to work with a contractor or designer for the renovation work and a realtor to handle the quick sale. You cannot afford to go wrong here. You ought to pick a team of individuals you can trust, and those who know what they are doing. The costs incurred in this process also determine how the bottom line will look. This is a make or break decision.
Now you know. We trust you are better equipped for a house flip.
If you have any insights and personal stories to share about house flipping, we want to hear about it.