What you need to know about flipping homes
Making money flipping houses is possible, but you have to do your home-work before you get into this market. Here are the major areas of flipping houses you need to be aware of to make it work.
Know the Local Real Estate Market Thoroughly The only way that you will know if a given property is truly a deal is if you know the market value of comparable homes in the area.
We work with you to learn about both asking and selling prices in the area you are considering, and to make you aware of properties as soon as they come on the market to help you find real bargains. maca@uzcagroup.com
You Have to Buy at WELL Below the Prevailing Market.
This step should never be taken lightly. If you think of the ultimate selling price of the property as its retail price, the price that you are paying should be seen as the wholesale price. The difference between the two must provide a sufficient profit, plus room to cover property renovations.
You Should Be Able to Rent Out the Property Profitably Sooner or later you’ll find yourself stuck with a difficult-to-sell property. Should that happen, you will almost certainly have to rent it out until a suitable buyer can be found.You should have a thorough understanding of what comparable properties are renting for the area.
Know the Cost of Typical Repairs
If you do not have much experience in home remodeling and repair, you’ll have to create a panel of experts whose knowledge base you can tap on short notice.
No matter how good a deal is, you could lose money on it if the purchase price plus the cost of repairs exceeds the market value of the home.
You’ll Need Plenty of Cash. Mortgage lenders typically don’t lend more than 80% of the value of a non-owner occupied property. If the property is in serious disrepair — or the lender has reason to believe that you plan to flip it in just a few months — you may not even be able to get a purchase money mortgage on the property all. In that case, you will need to pay all cash.
You’ll also need to have plenty of cash for repairs. It’s unlikely that you’ll be able to get a home equity line of credit to make repairs on a non-owner-occupied property, so you have to pay the cost of repairs out of pocket.
So, yes, you can make money flipping houses. But there’s a lot more to it, and you’ll need to understand it all in order to make the promised riches. For more information do not hesitate to contact us, at maca@uzcagroup.com
