Not surprisingly, house flipping is big business in the United States. In fact, it accounted for over 6% of the entire real estate pie as concerns residential property sales in 2019, 2020, and 2021. As you may have guessed, it is big business and very competitive. Thus, if you don’t have the basics down, you can expect your house flipping endeavors to flop. This blog will help keep you in the blue by tackling a handful of the most salient aspects of preparing yourself to flip houses profitably.
Acquiring the Necessary Funds
Real estate is not cheap! For any piece of property, you have to deal with the acquisition cost, the associated interest, closing costs, loan costs, and any associated administration fees. One option is using the HELOC; or home equity line of credit and taking advantage of the tax deduction applied to the interest. Even so, you’ll still need to fund the opportunity costs and the holding costs that are attached to house flipping. Research your financing options extensively; the time invested will be worth it in the end.
You Will Need the Relevant Skills
Do not be fooled by the fact that many house flippers are otherwise employed full-time in their primary endeavors (tradesmen, firefighters, etc). It takes skill to be successful in this real estate hustle. What does that entail, primarily? Something called sweat equity: if you can perform drywalling, carpentry, roofing, and installations, then house flipping may become very lucrative for you. Otherwise, you’ll have to shoulder the cost of professionals who can make the amendments you need to put the house on the market and make a profit.
Patience is a Virtue
The above is true in nearly all things; house flipping is no different. Beginners tend to fly out the gate and buy the very first run-down fixer-upper that they see, thinking that riches await around the corner. The contractor(s) you hire in such a scenario is unlikely to have the best ROI for you, as they are lying in wait for novices. The successful house flippers anticipate slim margins and long wait times; which means they plan for these beforehand and so avoid making rash and unprofitable borrowing decisions.
Let the professionals at Jasema Capital help you in your financial and house flipping endeavors; visit our blog for more information on similar topics and drop us a line.