There are several ways on how to make money off today’s booming real estate industry. You can invest in a real estate investment trust or you could put money in vacation rental properties. There are also pre selling condominiums that can be brought for cheap.
But for those with some money to spare and can absorb risk in exchange for better returns, flipping houses is a viable option. Flipping is one of the more profitable and effective ways to make money in real estate. The idea of flipping is to purchase a property, apply repairs and renovations (if they are necessary) and sell the property for a profit.
Nevertheless, it’s not easy as you might think. Flipping houses is more to it than meets the eye. The flipping process is complicated and every step of the way needs to be carefully assessed. A single mistake can affect your supposed profit.
Flipping certainly is not for beginners.
Look for undervalued homes
It is often said that you make money in the stock market when you buy not when you sell. When it comes to flipping houses, the same stock market adage is true. Look for undervalued homes – real estate properties that show potential for capital appreciation in the coming months or years. Undervalued properties may also come from short sale transactions and foreclosure auctions so pay close attention to courthouses and relocation home sales. Old, vacated and/or damaged homes located in prime locations are also undervalued to some degree. If you could apply the necessary facelifts in unwanted properties, you might be looking at a rare diamond in the rough.
Renovations that make financial sense
The sad truth is that not all types of home renovations pay off. Sometimes the money invested in renovation don’t result into a “material” increase in value. There may also be times when a particular remodelling project does not yield any increase in home value.
For that matter, you should do your homework beforehand. Identify the types of renovation projects that can materially increase the value of a property. Kitchen renovations including small projects like replacing the kitchen countertops are among the oldest tricks in the real estate investor’s book. Repainting the walls and simply removing clutters also increase your home’s value.
Don’t get too excited when renovating and don’t overspend.
Seek professional advice
The type of advice you get correspond to the amount of money you pay for it. There are advice freely given away by your dad, your best friend or you’re “investor” uncle and they’re almost always worth every penny you pay for it – which is nothing.
When you’re flipping houses for a profit, even the smallest things count. Likewise, you can’t afford to commit mistakes by following unsolicited advice provided by unqualified people.
Seek the advice of real estate agents, professional marketers and/or people who have done it before. People who have succeeded in the field of flipping.
Flipping is ideal for those who can devote a significant amount of time and effort. Despite the considerable risk involved, lots of people are venturing the flipping side of the real estate industry due to high returns and profit margins.