July 3, 2018
Looking to make a little extra money while utilizing your renovating skills? House flipping just might be the project for you.
House flipping is a process where real estate investors buy homes and resell them at a profit. How do they make a profit? By completing renovations that make the home more attractive and appealing to buyers. However, it’s not as simple as it may sound, and if you’re not well versed in the house flipping business you could risk losing rather than profiting. Let’s take a look at what it takes to flip a home.
- Make the commitment. Before you begin the process, you must be certain that you have the time, drive, energy, and money to complete the project.
- Get educated. Buy a book or attend a class about flipping houses to learn more about the process before diving in headfirst.
- Do some market research to determine where to buy. Look at a few different areas and find the answers to these questions: How much does the average home here sell for? How quickly are the properties located here selling? What property types and layouts are selling the fastest? Use this information to determine the likelihood of a successful flip in that location.
- Figure out how you’re going to pay for the home. Will you be paying everything up front in cash? Will you need to take out a loan? Getting money quickly is necessary for house flipping.
- Pick your house. Don’t just pick the first house you visit! Make a point to look at many different properties and carefully narrow your options down until you’ve decided on the perfect house.
- Now that you have done all the preparation, it’s time to buy, renovate, market, and sell the property!
Financing Your Rehab: A Closer Look
Since house flipping can be risky, you might think that lenders shy away from handing out loans to house flippers…but you’d be wrong! Hard money loans are great for these types of projects since they have a one year or less maturity date and can be acquired fairly quickly. These loans are often based on collateral, rather than credit rating or current debt.
The Maryland Private Mortgage Lending Team