Flipping a home isn’t all glitz and glamour. Despite what popular TV shows would have us believe, flipping a home takes a lot of money, patience and hard work. Many novice home flippers make the mistake of choosing the wrong financing, picking the wrong property, cutting corners and being too hasty with their time and resources. If you want to jump into the business of flipping a home, here are a few tips on how to make your dreams come to life.
Learn All You Can About Real Estate
If you have little to no knowledge on real estate then it’s time to start. Read books, take courses and talk to your friends and family who are real estate agents every chance you get to educate yourself. Consider taking online education classes from Kaplan and attend real estate seminars so that you can learn the ins and outs of the business. Classes and books will teach you everything you need to know about the housing market, real estate law, home financing and more. Today, home flipping is such a hot topic that home flipping stars tour the states with seminars on their success stories. These can be a great place to learn how to make money in real estate, however, be sure to read the Than Merrill event reviews, or those of any other well known home flippers who may be coming to your town, to make sure the seminar is worth your time. With so much information available, it’s in your best interest to take advantage of every resource you have to become proficient in real estate.
Understand the Costs
Home flipping doesn’t come cheap. Most people don’t realize the real costs involved in a fix and flip venture. You need to consider all of the costs before and after you purchase the home. Factor in the down payment, the mortgage, the real estate broker’s commission, deposits, escrow costs, legal costs and so much more. Whether you want to fix and flip one home or you want to create a home flipping business, you need to learn to plan these costs ahead of time. You may want to rely on professional assistance and advice to help you find the best team of contractors, licenses and other things that will cost you in the future. Standard home mortgages must be paid back in monthly installments. But, if you are already on a fixed income and having trouble paying your monthly bills, such a mortgage may not be the answer for you. Instead, you may qualify for a reverse mortgage, which is also called a home equity conversion loan. When applying for an HECM reverse-mortgage disadvantages and advantages must be considered. For instance, as the loan recipient you will be obligated to use the home in question as your primary residence. However, you will have the advantage of not having to pay the borrowed money back fully unless you vacate the premises.
Finance the Right Way
There are several ways to finance a fix and flip venture and they’re all determined based on your needs and financial status. The most common loans include hard money, cash out refinance, home equity line of credit, permanent bank loans and online mortgages. Fix and flip hard money loans are short-term loans that allow you to earn money fast and flip your home on a dime. While they do have high interest rates, they are the easiest loans to procure for first time home flippers. Find these types of loans regionally such as San Diego Hard money from SD Equity Lenders. Bank loans, on the other hand, are much more difficult to obtain and are usually acquired by established home flipping businesses. Your goal should be to work toward loans with lower interest rates so you can maximize your profits.
Be Patient
Patients truly is a virtue when it comes to flipping homes. Seasoned real estate agents know that it’s unwise to jump on the first cheap and rundown home they see. Have the patience to consider your options and choose based on the potential value you can gain. Carefully inspect homes to see if they’re really worth the investment. Ask yourself, “Am I going to have to put more time and money into this than I can get out of it?” If the answer is yes, it’s time to move on. Be realistic about the kind of home you can afford, where you should buy, and the renovations you can afford to perform. Real estate is just like any financial investment because it involves risk. If you’re going to risk a large sum of money then take your time.
With these four tips in mind you are well on your way to a successful fix and flip venture. Transforming a home from start to finish is difficult and time consuming work, but the payoff for your patience will be huge. Consider this and you will fix and flip homes in no time.
