- How to get started flipping houses can be immensely rewarding if you go about it sensibly, practically and with sound financial backing from a reputable home loan comparison service such as ooba Home Loans.
- Develop a business plan so that you can apply sound financial practices to managing flipping houses. You want to make a profit, after all.
- Choose the location of your desired property wisely. The worst house in the best area is ideal.
- Select the team who is going to help you with the renovation.
- Get referrals, quotes and commitments of time and expertise.
What is house flipping? It’s when you buy a home, usually at auction, with a view to fixing it up and reselling it for a profit. Yes, you can make money from this but you can also lose money if you make bad financial decisions.
Here’s a guide to flipping houses for beginners:
1. Set a budget
Once you’ve decided on what you’re prepared to invest, and have approached a reputable bond originator such as ooba Home Loans to assist you in securing the home loan finance to do it, should you need finance, set a budget for the renovation and stick to it.
2. Location, location, location
Buying the worst house in the best area and renovating it will get you a better return than the reverse scenario.
If you’re new at house flipping, you’ll want some advice on location. Real estate agents are a good source when it comes to tracking property prices per area. Look at sales over the preceding six months.
Also look at positive influences on property prices such as low crime rates as well as proximity to schools, public transport, retail centres and/or neighbourhood supermarkets as well as recreational areas and outdoor spaces such as public parks.
An estate agent can advise you on trends in the property market, which will help in your location search.
3. Develop a business plan
Know how much you can spend on renovation and whether that investment will be enough to gain the profit you’re looking for when you’re ready to sell.
4. Decorate for your target market
There’s no point decorating the property according to your taste – you’re not going to be living in it – so set your sights on enhancing what can be improved without spending a fortune to make it design magazine-ready.
5. Build an effective team
Your team can make or break the job, if you’re not doing it yourself. Ask reliable and competent builders, architects, electricians, plumbers, painters, handymen and landscapers to quote on whatever it is you need and to confirm their availability before you commit to the purchase. Referrals are often the best recommendation. Depending on how big the job is, you might even need a project manager to make sure the project stays on track and that everybody meets the agreed project completion deadline.
6. Hire professionals
You’ll also need an attorney to draw up contracts and an accountant to help set up your business administration for tax purposes. You need to know which expenses to track prior to submission of your tax return and which ones can be written off.
Getting started flipping houses is not for the faint-hearted. Your first one will be a learning curve. You’ll be able to tackle later projects with more confidence once you gain more experience.
Flipping houses: Unleash your creativity for a profit
Flipping houses often starts when people with creative or decorative flair, some financial means, time on their hands and/or an eye for a bargain find a way to channel their energy into a passion project. For many, this is their main business, for others it’s a sideline.
Interest rates remain at a low point, despite recent hikes, so now is a good time to purchase a home. The low rates improve your chances of making a profit.
How a home loan comparison service can help you make a profit
Securing low interest rates on your home loan will reduce your costs and therefore increase your profits. A home loan comparison service, such as ooba Home Loans, can help you achieve this by submitting your home loan application to multiple banks, allowing you to compare deals and choose the best one.
We also offer a range of tools that can make the home buying process easier. Start with our Bond Calculator, then use our Bond Indicator to determine what you can afford. Finally, when you’re ready, you can apply for a home loan.
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