People who enjoy watching home improvement shows on HGTV or streaming giants like Netflix and Hulu may find themselves constantly drawn into the appeal of house flipping. Binge-watching such shows while quarantining and staying at home during the past year may have inspired many people to make a career out of house flipping to earn money during the pandemic.
When the coronavirus (COVID-19) pandemic began, and city and state leaders implemented lockdowns in response to it, the financial and economic ramifications that followed threatened the real estate market’s stability. Many people began questioning if prices and interest rates would drop and if more houses would become available on the market. Data suggests that the housing market’s condition varies according to buyers’ and sellers’ location and changing preferences. For example, home buyers showed an increased interest in suburban areas because these areas have lower population densities than cities, making social distancing more practical.
Overall, the market continues to rebound as COVID-19 restrictions become more relaxed. Consumers began buying and selling again as interest rates remained low and buyers made offers above sellers’ asking prices. While real estate experts are currently unsure of the full impact of the pandemic on the housing market, house flipping appears to be a career that can withstand the changes the pandemic has caused. For instance, professionals or amateur home buyers can complete home renovation projects in relative isolation, making social distancing practical during house flipping. Ultimately, flipping properties can be just as rewarding as risky. Researching the market, lining up sufficient financing, working hard, and being savvy about the house flipping projects you undertake are some ways you can succeed at this venture. Listed below are practical ways you can start a house flipping business and maximize your profits.
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Establish feasible business plans.
The first step in beginning your house-flipping business is making plans that you can bring to life. Operational procedures and a practical yet flexible budget that accounts for unexpected events can keep you on track and be your guide for estimating profits, making financial projections, acquiring investors, and determining who’ll have involvement in your projects. Detail the funds you have, the amount you think you’ll need to purchase properties and fix them, and how much you anticipate making back.
During this phase, a home buyer must choose the type of business entity you intend to run. Will it be a corporation or limited liability company (LLC)? One of these business entity types could benefit you, as it would provide liability protection. Having such protection is crucial if contingencies or issues occur with a flipped property that prompts a client to sue your business. Consider discussing such possibilities with a business attorney and get your establishment registered in your state. Following registration, take care of other legal tasks like getting an employer identification number (EIN), obtaining business insurance, and getting the permits and licenses required to begin flipping houses officially.
Boost your network and increase your connections in real estate investment.
To flip properties successfully, you’ll need myriad resources to complete your projects. First, rely on any connections you have with professionals in the real estate investment industry, primarily if they work in the area where you intend to invest in property. Using word-of-mouth and anecdotal evidence from others can help you locate the best, most experienced realtors, contractors, and wholesalers that can assist you in completing house flipping projects. One way to boost your offline and online presence within the industry and become well connected with real estate experts is to follow a real estate marketing plan consisting of on-trend tactics.
Consider implementing advertising methods like business cards, flyers, postcards, and digital advertising. Advertising through newsletters, email lists, and social media platforms can help you reach real estate agents, contractors, potential buyers, and potential clients. Effective advertising methods can drive traffic to social media platforms and real estate websites, converting to real estate leads. Enhance the way you and your business appeal to real estate experts, prospective collaborators, and potential clients. Shop for business attire from a reputable retailer that provides dress shirts, blazers, and petite blouses and take professional headshots that you can compile in your business portfolio or post on the real estate website you curate.
Locate contractors and suppliers.
A successful house flipping project that garners maximum profit is one completed with demonstrable work. For example, some houses you’ll flip may require new flooring, carpeting, paint jobs, and roof replacements. When the best contractors and home improvement professionals complete these renovations, their skills can practically transform properties into new homes. For superior results in repair and replacement projects, enlist skilled, highly trained professionals from credible home improvement companies.
For instance, the partial and complete roof repairs or total roof replacements some houses require are tall orders that you should leave up to a professional roofer. An online search for ‘roofer near me‘ can lead you to the best roofing company in your local area. The best local roofer has skilled, trained roofing contractors with years of experience who can handle a roofing project using any material, including, but not limited to, asphalt shingles, metal roofing, or slate roofing. Ultimately, entrusting roofing projects, especially for an old house, to the best roofers from a local business guarantees you that the properties you flip will have high-quality, durable roofs.
Obtain financing for your fix-and-flip business.
After you research the real estate market and conduct property assessments, your next task is to finance your business and its flipping projects. It’s common for people to use hard money loans—short-term loans secured by real property—to finance their real estate transactions. You can seek such a loan from a hard money lender or utilize another type of short-term loan: a bridge loan. Bridge loans refer to sums of money that banks or other lenders provide to cover the interval between two transactions. Bridge loan borrowers are responsible for paying off or refinancing the loan after the completion of their deal. For example, real estate investors typically consult a bridge loan lender when they fix up a flip property, list it for sale, and simultaneously have another house they plan to buy and flip.
When estimating and budgeting the costs of house-flipping projects and acquiring sufficient funds, it can be beneficial to remember the famous saying that ‘time is money.’ Quick turnarounds can help you avoid any mounting interest, penalties, and fees, and they’re good for business. Selecting properties that you can complete fast yet thorough updates on and sell quickly is a surefire way to maximize profits while saving time.