In the spirit of the holidays, Noble Mortgage has a list of house flipping tips, and we’re checking it twice. Which of these tips are pieces of helpful advice that make the Nice list, and which are bad ideas that will wake to a lump of coal in their stocking?
Any inexpensive house is a good house for flipping.
But doesn’t spending less yield a higher profit when it’s time to sell the house? Not necessarily. Quality matters, so just because a property is cheap does not mean you should buy it. Several factors influence how much the house will be worth on the market, location being one of the most important. If you invest in an inexpensive property located in a neighborhood with a bad reputation, buyers will be scarce. The house will be challenging to sell, and the longer it’s on the market, the more money you’ll lose. Always take into consideration other influences affecting how fast the house will sell when it’s time to put in back on the market.
Get educated. House flipping isn’t for beginners.
Is house flipping easy? Well, it’s certainly harder than you may think. The goal of house flipping is to invest in the right property at the right price in the right location to yield a profit. It involves researching properties, gathering the funds to purchase one, acquiring the proper permits, developing construction timelines, hiring trustworthy contractors, preparing for hiccups along the way, and reselling the house quickly. The smallest stumble can derail the process, especially when dealing with areas such as finance that may not be your expertise. Educating yourself on the process is a must, so you know exactly what needs to get done, how, and when.
Flipping a house isn’t a one person job. Network and make connections.
Unless you’re a superhero (which, kudos to you if you are), flipping a house is a stressful undertaking for just one person, so make connections with professionals you can rely on. Interested in financial advice? Ask the experienced house flipper you met at a local event. Need to start repairs? Research and hire contractors you trust to complete the job within stated timelines and budgets, and if they knock it out of the park, continue to work with them on future jobs and build a rapport. Time to put the house back on the market? Get in touch with a knowledgeable real estate agent to develop your marketing plan. Two minds are better than one.
Price the house based on how much the job cost.
At the end of the day, your flipped property is worth what the real estate market says it’s worth. Even if renovations cost more than expected, listing the house at a higher price isn’t an option. Location, square footage, layout, and age all influence the selling pricing. So what’s a simple way to avoid spending too much on renovations if the price doesn’t rise accordingly? Avoid over-improving a property – a $300,000 house isn’t going to sell in a $100,000 neighborhood. Although it’s tempting to install chrome gadgets in the kitchen and crystal chandeliers in the dining room to spruce up a house, it may not be necessary.
Focus on flipping unique houses – they’ll fetch a better price.
Unique. One-of-a-kind. Distinctive. Great adjectives, right? Not always when applied to a house (unless you specifically cater to homeowners with eccentric tastes). Remember, the houses that sell are the houses people want to live in. Renovating a unique property and keeping it that way could result in a lack of profit from your flipping venture. While you may find the quirks intriguing, if it’s too out of the ordinary, the common buyer may not be interested, leaving your one-of-a-kind house to sit on the market. That’s not to say that you shouldn’t purchase a unique property, but factor into your budget the cost of renovations to update the house with more standard features that appeal to the average person.
Use a hard money loan to finance your flipping project.
If you don’t have enough cash to fix and flip a distressed house, a hard money loan is your ideal solution. With this type of loan, lenders provide short terms advances used to purchase, repair, and close a property. Qualifying for a hard money loan as opposed to a traditional bank loan is also easier because the property’s potential value carries more weight than the borrower’s experience. Whether you’re new to the scene or have been flipping houses for years, applying for a hard money loan is a smart method to get cash fast, so you can fix and flip a property in less than a year.
To fund your house flipping project, contact Noble Mortgage today.
Noble Mortgage funds up to 100% of the purchase price, repairs, and closing costs for an investor flipping houses! If you’re ready to begin your investment, consider taking advantage of our pre-qualification option to jump start the hard money loan application process. Call us at (713) 680-8100 or contact us today to speak with a lender. We’re delighted to help fund your house flipping project!