In the past, buying and selling various forms of real estate was a lucrative career choice. Unfortunately, after the housing market crashed, the United States suffered a $7 trillion loss in home equity. Millions of homeowners and investors lost a portion of that housing wealth. If you are considering flipping a piece of real estate, consider these tips to ensure you make a wise financial investment.
While obvious to hear, buying at the lowest possible price is key to successful flipping. Everyone would love to buy the property of their dreams, in their desired location, with an unbelievably low price. Unfortunately, this is not a realistic goal in today's world. However, buying a good quality home at a decent price is possible when thinking outside the box.
Commonly associated with the ugly duckling of real estate, a foreclosed property is a great option for investors to buy low through a bank auction and sell with a profit. In these auctions, banks will offer you the chance to buy property at a lower market price. Of course, these properties may be in need of a repairs and cosmetic improvements. To have a better financial understanding of the necessary repairs and updates, be sure to do your research before each auction.
Renew, but Don't Renovate
Purchasing real estate in a good location with a sound structure is ideal, but you may need to complete some cosmetic improvements and modern updates to flip successfully. Unfortunately, many investors opt for a complete renovation on the property. This will only lead to a decreased return on your investment, so choose to renew rather than renovate. To update smart and ensure a larger return, consider the following tasks:
- Siding – The exterior of your property enhances its curb appeal and value tremendously. When renewing the property before its sale, consider replacing the fiber-cement siding for an 87 percent return.
- Outdoor Spaces – Adding a screen porch or concrete patio may not be financially feasible. However, the addition of a small deck can add enormous appeal and value.
- Lighting – Purchase new light fixtures for the exterior and interior of the property. Opt for modern fixtures with a flat black or bronze finish to ensure their style stands the test of time.
- Clean – Pressure wash the exterior of the property. Be sure the siding, roof, driveways, walkways, and outdoor living areas are clean and free from dirt, stains, and mold. In addition, wash windows on the inside and outside of the property.
Man the Manpower
Many investors will hire contractors to complete each task on their property, which can become very costly and time consuming. Fortunately, many required updates are easy and possible to complete on your own. To reduce the cost and time of flipping a property, complete the majority of tasks on your own. Utilize friends and family members for added manpower. For specialized repairs or updates, barter services or make friends with plumbing, electrical, tile, and heating and air conditioning contractors.
By using your strength and skills and bringing in some friendly manpower, you can reduce flipping costs thousands of dollars.
Know your Market
After updating the property, your first inclination may be to list at an extraordinarily high price. While you may feel this is the best way to earn a larger profit, it is only setting yourself up for a real estate disaster. A home priced at $250,000 in a market that has an average home price of $150,000 will not bring in interest. To make the property appealing to potential buyers, you want to set a sale price that is competitive to others in your market.
In today's economy, it is possible to successfully flip a property. Using this guide, you will see a large return on your investment without flipping out. For more information on selling property, check out a company with the claim, "we buy ugly houses."