Flipping Houses

March 4, 2009 | In Investment, Buy Home, Tips |

There are plenty of infomercials on late night television that talk about flipping real estate. Here are some steps that you can take to help you get into the real estate flipping business. Real estate flipping can be a good way to make money, but you have to be careful when you are starting out because you can lose money with it as well.

When you are getting into the real estate flipping business, the first thing that you want to do is to get a loan that is a lot less than the one that you have for your residence. Once you have the loan, you are going to want to start looking for a house to purchase. It’s important that the house that you buy is in a location where a lot of people will want to live. Do some research and see what the area is like for selling houses. Also drive through the area and see how many other houses are there for sale. You don’t want a lot of competition;
Once you find a good location, look to purchase a second house for no more than 70% of the home’s true value. If you can get it for less than 70%, that’s even better. You want to make sure that you have enough capital before you can start making money on real estate flipping.

The houses that you should look for are houses in nice areas that are dilapidated, but are sound structurally. The improvements that will draw buyers in and won’t drain your budget are things such as landscaping, painting, new carpeting and flooring, and putting in new fixtures in the bathroom and kitchen. Stay away from building new rooms, gutting a basement out, and taking walls down, because they don’t guarantee a high yield.

Find out everything you can about home improvement so that you can save money on contractors by doing the improvements yourself. You can find lots of information at the local bookstore. Even if you cut into your profits with the purchase of repair and home improvement manuals, it’s something that you will always have with you and can use on your next house flipping project. You can also use the Internet to your advantage, finding people who have flipped houses, looking for websites on home repair, and taking classes online.

Don’t despair if you have trouble selling your house right away. There is always the option of renting your house, and you can sometimes get double what your mortgage is from your renter. This way, you are able to meet your mortgage payments and put some money aside for your next house flipping project.

The last thing that you do to help yourself with getting into real estate flipping is to form good relationships with contractors and real estate agents. There may come a time when they will be able to help you for less than they normally would charge. It also is a good idea to get as much information that you can about the codes and building regulations where you are purchasing the house. This way, you will know that you are following what needs to be done.

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