Behind-the-Scenes House Flipping Tips You Don’t Learn From TV Shows
After watching a house flipping show on television, you may think that it is easy to find a house, fix it up and make $50,000 in profit. However, there is a lot that they don’t show on you such programs. For instance, they rarely show you how they decide how much to offer on a particular home or how they finance their purchase. What should you know about house flipping that they may not tell you on TV?
How To Pick a Home to Flip
The first step is to pick a home that you can reasonably expect to profit from. Ideally, you will look for homes that are below market value as that gives you more room for achieve your profit target. For instance, if you want to make $50,000, you should look for homes that you can buy and rehab for no more than $150,000 that can be sold for at least $200,000.
How To Get Financing for a Home Flip
There are a variety of ways that you can find financing for a home flip. First, you may want to look into hard money lenders. Hard money lenders are generally private investors who are looking for a secure investment.
The interest on these loans generally compounds by the day, and the home is generally used as collateral. However, the upside is that you generally don’t need to go through such a rigorous application process to get the money. Some hard money lenders allow you to get a mortgage for the purchase price as well as extra money that will be used to rehab it. Fix-and-flip loans are generally not available from traditional lenders.
That You May Have to Do The Work Yourself at First
House flipping professionals on television generally have contractors, interior decorators and real estate agents on their team. While you may be able to find one or two people willing to help for free or a reduced fee, your first flip will be completed with a lot of sweat equity. In other words, you will do most of the work yourself. However, this isn’t a bad thing as it will teach you skills that you can use to your advantage around your own house. Knowing how to replace a floor or paint a home’s exterior could save thousands of dollars in the future home maintenance costs.
That You Shouldn’t Skip the Real Estate Agent
Real estate agents generally charge anywhere from 3 to 6 percent commission to sell your home. While you may want to skip this cost, it is generally not worth it to do so. A professional real estate agent is someone who will organize an open house, market the property online and email the listing to thousands of people.
He or she may be able to find a buyer in a matter of days or weeks whereas you may take weeks or months to sell it on your own. Remember, the longer the home stays on the market, the more expensive it is for you to hold.
House flipping can be an effective and legitimate way to make money. However, it is not nearly as easy as it looks on television. You have to find the right property to flip, spend months rehabbing it and figure out a way to buy the home and pay for rehab costs. Therefore, it may be a good idea to start with a relatively inexpensive property that you can gain experience with to find out if flipping is something you want to pursue as a side gig or career.