If you are interested in starting a house flipping business, there are things you should know. This type of business involves buying properties and reselling them quickly for a profit. Those who succeed in this business take the time to learn everything about it prior to trying their first flip. You also want to follow the same technique. Additionally, partner with professionals who can give you trustworthy advice concerning a house flipping business.
Obviously, you need to find viable homes for sale and the best way is to select a reputable real estate agent to work with. A contractor is also a necessary professional to hire as they will help you upgrade the houses before you can resell them. If you are equipped with a good business plan, have adequate cash, and are surrounded by excellent real estate experts, you can buy a home to flip now.
How to select the best homes to flip
When looking for the right homes for sale to flip, there are given factors you should reflect on. These include the following:
Source of capital – Without your own savings to purchase the first home, the next best option you have is home loans. You should provide evidence that you can manage to repay your mortgage loan by presenting statements of your salary, savings, and assets. In some cases, you could take a home equity line of credit on your own home to finance the purchase of your first flip. If the owner of the house you wish to buy can hold the mortgage for you, then you can use this option.
Renovation cost – Every home that is advertised for sale has its own renovation needs and costs. Therefore, you should ask your contractor to inspect any house you are interested in and produce a report showing the overall cost you are likely to incur.
Home appraisals - What if your lender needs appraisals of the first home you have bought before and after the renovations are done? You will require the assistance of a home appraiser to assign a value to the home before and after renovations. You also want to know this value to be able to price your home.
Your credit score – This will only be important if you have no personal funds for getting homes for sale. Your mortgage lender will check your credit score prior to approving your loan. Any score below 650 might cause your loan application to be rejected.
Timeframe – If you want to do well in this business, look to flip homes that will be easier to rehabilitate and resell within two months at most.
The actual method of searching for homes to flip includes the Multiple Listing Service or MLS. It refers to a database that is created by real estate brokers and lists all homes for sale in a given region. Every property's characteristics and statistics are presented too. For just a small monthly fee, your real estate agent can gain access to this database. Moreover, you can search for reliable real estate investment groups in your area as well as estate and foreclosure auctions.