Many real estate investors have found flipping homes to be quite profitable. Many even have developed their own personal "formulas" for finding homes and have mastered the game finding the right fixer-upper, flipping the home, and making a profit on the back end. Buying and selling homes and be a quick way to turn a profit--if you know what houses to buy. Not all flips can work as fixers; however, there are millions to be made by turning the ugliest house on the block into a Better Homes and Gardens cover story. On the other hand, inexperienced real estate investors can quickly lose money buying homes that don't turn a profit.
If you are just getting your feet wet with real estate investing and you want to dive into flipping houses, you need to know what type of property to invest in.
Know Your Market
Before you even begin, you should explore your market. Research the homes for sale in the area. Keep track of sales, how long homes are on the market, and what they are selling for. Ask questions so that you better understand the market; i.e., seller paid closing costs or sellers decreasing the asking price. All of this information will help you when you search for that perfect house to flip.
Take a look at model homes in the area. Take note of the details or perks that are making homes sell, like a garden tub or bay windows. When you remodel your home, you can add perks like these to attract buyers.
Finding that Diamond in the Rough
When you're seeking out homes to flip, you want to find homes that only need cosmetic work: paint, kitchen and bath updates, floor refinishing, etc. At first glance, you may say to yourself this will never work, but you have to use your imagination when viewing these homes. As long as there are no major renovations, you can turn a frog into a prince with a kiss of renovations. Make offers on the ugliest properties in decent neighborhoods, because these will be the most profitable.
Proceed with Caution
As you are searching homes to invest in, you will undoubtedly come across stinky, old, smelly, carpet-stained and bug-infested homes, but these are good because it's only cosmetic. Patching up holes, landscaping yards--these are all good things. Problems that you want to try to avoid are plumbing issues, structural damage, roof damage, electrical problems, etc. These things equal MONEY! Sometimes damage may be worse than what it appears, so get a contractor in there and get estimates before you make an offer. Yes, it will cost money, but it will also save you from a buying a dud.
You can make a fortune fixing and flipping smelly, run-down homes. Just remember, get it inspected, and get estimates for repairs. Knowing how to spot a diamond in the rough can mean the different between a profit or not.
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