In recent years, flipping houses has reached an all-time high in popularity among Do-It-Yourselfers, home and garden television shows, magazines and other media outlets. In fact, many weekend warriors who have some of the skill set to do so, have considered purchasing fixer-uppers in the hopes of making some extra income in a stagnant economy.
Investing in real estate is an excellent way to increase your earnings. If you have the time, money, and skills to get started you may be eager to start your next venture in flipping houses but unsure where to begin. At Starting Point Real Estate, we pride ourselves in our successful flipping projects, and love sharing information to our friends in investment. Flipping real estate is not just a hobby though, when you undertake a project like this, it can require all the attention and time of a full time job.
By definition, “Flipping” a house consists of buying a run-down property below market price, increasing its value somehow, and rapidly re-selling it for a quick profit. This means, you need to start with extensive research to understand the true value of the house you intend to purchase, the monetary value of the updates you intend to make, and the projected market value of the finished product. Additionally, you will need to do research on the housing market for the region you intend to invest in, and find out who is looking to buy homes in that area and the features they expect in a home. For instance, if you’re looking to flip homes in a neighborhood full of primarily rentals, you may find it harder to turn a profit in a timely manner. Look for up and coming neighborhoods, or foreclosed homes in established neighborhoods.
Purchasing Your Flip
Familiarize yourself with the financial processes needed for purchasing your flip property. Check out our blog on creative financing for investment properties or speak with your financial advisor. Understand that in order for your flip to be successful you need to purchase your flip at an under-market price. The lower your purchase price and the higher the house’s potential market price, the larger your profit margin will be.
Materials, Labor, and Listing
Thoroughly research the best places to purchase your materials for updating and renovating. Your do-it-yourself center down the street may have everything you need- but you could end up paying premium prices which cuts into your profit margin. Check out home repair stores that deal with contractors specifically. They carry quality materials, and if you’re buying products wholesale or in bulk it may save you additional money. Develop relationships with relevant companies in your community, as these relationships can be mutually beneficial- saving you money and keeping your investment within your community. If you’re looking to make flipping houses into more than just a hobby, certain companies may provide contracts with you for services, really adding up savings in the long run.
Doing as much of the work on your own can save you money, adding to your profit margin. It’s important to consider how long it will take you to finish a task, as opposed to a skilled laborer. You may find that hiring certain laborers for tasks will save you time, which means your flip will be available for
listing much sooner than working alone. The quicker you sell your flip, the sooner you can start another, which means more money in the long haul.
Determining whether to list the flip on your own, or working with a real estate agent is also an important step to getting started on your flip. If you intend to flip houses regularly, it may be worth your money to hire a professional that can list your renovations, show them, and get them sold more quickly than if you’re selling independently.
Starting Point Real Estate has been working in the St. Louis region renovating, and successfully flipping homes in the St. Louis region for nearly a decade. If you have questions, and would like more information on real estate investment, contact Jeff today. Follow us on Facebook updates on what’s happening in the St. Louis market today!